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Leveraging intellectual property: The value of harmonized enforcement regimes

Author

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  • Gill, Andrej
  • Heller, David

Abstract

This paper examines the role of intellectual property (IP) law as a determinant for external debt financing of innovative firms. For identification, we exploit exogenous variation in patent right enforcement arising from the 2004 EU Enforcement Directive. This major policy reform strengthened IP rights and, thus, raised patent owners' asset position. We find that patenting firms significantly increase their use of debt and benefit from lower interest rates in response to the amendment, especially if they own valuable patent portfolios. These effects are most pronounced for relatively small and financially constrained firms, emphasizing the importance of the legal framework in fostering debt financing activities of innovation-oriented firms.

Suggested Citation

  • Gill, Andrej & Heller, David, 2024. "Leveraging intellectual property: The value of harmonized enforcement regimes," Journal of Banking & Finance, Elsevier, vol. 163(C).
    • Handle: RePEc:eee:jbfina:v:163:y:2024:i:c:s0378426624000864
    DOI: 10.1016/j.jbankfin.2024.107169
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    More about this item

    Keywords

    Intellectual property rights; Debt financing; Legal enforcement; Financing constraints;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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