IDEAS home Printed from https://ideas.repec.org/a/oup/revfin/v25y2021i3p669-711..html
   My bibliography  Save this article

Intellectual Property Protection and Financial Markets: Patenting versus Secrecy

Author

Listed:
  • Nishant Dass
  • Vikram Nanda
  • Haemin Dennis Park
  • Steven Chong Xiao

Abstract

Firms rely on patenting and trade secrecy to protect their intellectual property. We study how changes in the trade-off between patenting and secrecy affect firms’ stock liquidity and financing outcomes. We show that an international trade agreement (TRIPS) that strengthened patent protection led to a 10.2% increase in patenting, accompanied by a 14.0%–27.1% improvement in stock liquidity for firms in patent-reliant industries. This in turn allows the affected firms to increase equity financing by 1.9% and reduce leverage by 5.9%. Our results suggest that policies that promote use of patenting over secrecy can reduce informational frictions in equity markets.

Suggested Citation

  • Nishant Dass & Vikram Nanda & Haemin Dennis Park & Steven Chong Xiao, 2021. "Intellectual Property Protection and Financial Markets: Patenting versus Secrecy," Review of Finance, European Finance Association, vol. 25(3), pages 669-711.
    • Handle: RePEc:oup:revfin:v:25:y:2021:i:3:p:669-711.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/rof/rfaa033
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dan Hu & Eunju Lee & Bingxin Li, 2023. "Trade secrets protection and stock price crash risk," The Financial Review, Eastern Finance Association, vol. 58(2), pages 395-421, May.
    2. Gheorghe Hurduzeu & Radu Lupu & Iulia Lupu & Adrian Cantemir Calin, 2022. "The Nexus Between Research and Development, Protection of Intellectual Property Rights and Financial Development. A European Perspectiv," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 24(Special16), pages 970-970, November.

    More about this item

    Keywords

    Trade secrets; Patents; Intellectual property; Stock liquidity; TRIPS;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:revfin:v:25:y:2021:i:3:p:669-711.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/eufaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.