Google: Invalid URLs Generally Don't Hurt Your Rankings

A busy thread at Google Webmaster Help has one webmaster asking if a large number of broken links that are found internally can have a negative impact on your Google rankings.
The answer is it won't necessarily hurt the overall site's rankings in Google but it does hurt your internal linkage structure and hurts the user experience on your site. But generally, invalid URLs do not hurt the site's ranking on a whole. It does hurt the specific invalid page from ranking - since it is invalid. It doesn't give you the full benefit of using your internal linkage the most optimal way. But having invalid URLs and isolating just that, does not have a negative impact.
For More Details: http://www.seroundtable.com/google-invalid-urls-16032.html