Recently, inventors of research and development (R&D) firms have filed lawsuits for "reasonable remuneration" against the firms. Firms have begun to revise their reward systems to better reward researchers and preempt litigation. In the Olympus case, the court judged that inventors have an ex post right to claim rewards from inventions no matter what the contract ex ante. By using event studies, we examine whether court judgments and system revisions gave inventors an improved incentive to conduct research or discouraged firms from undertaking R&D investments. We find that the judgments and system revisions significantly increased the value of firms.
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Article provided by M.E. Sharpe, Inc. in its journal Japanese Economy.