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The American Inventors Protection Act : A Natural Experiment on Innovation Disclosure and the Cost of Debt

Hoffmann, Arvid O.I. ; Kleimeier, Stefanie ; Mimiroglu, Nagihan LU and Pennings, Joost M.E. (2019) In International Review of Finance 19(3). p.641-651
Abstract

We examine the impact of innovation disclosure through patenting on firms' cost of debt, focusing on the American Inventors Protection Act (AIPA) as an exogenous shock in innovation disclosure regulation. Post-AIPA, firms have an incentive to apply for patents only if commercial success is likely. Accordingly, we expect post-AIPA patents to be a better proxy for successful innovation activity, and thus to have a stronger effect on reducing the cost of debt than pre-AIPA patents. Indeed, we find that pre-AIPA patents reduce the cost of debt only for the most innovative firms, while post-AIPA, this effect holds for all firms.

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author
; ; and
publishing date
type
Contribution to journal
publication status
published
subject
in
International Review of Finance
volume
19
issue
3
pages
11 pages
publisher
Wiley-Blackwell
external identifiers
  • scopus:85040336429
ISSN
1369-412X
DOI
10.1111/irfi.12174
language
English
LU publication?
no
id
767c22ce-bc53-40c0-ad45-cdc22de57a26
date added to LUP
2020-09-18 11:17:12
date last changed
2022-04-19 00:55:12
@article{767c22ce-bc53-40c0-ad45-cdc22de57a26,
  abstract     = {{<p>We examine the impact of innovation disclosure through patenting on firms' cost of debt, focusing on the American Inventors Protection Act (AIPA) as an exogenous shock in innovation disclosure regulation. Post-AIPA, firms have an incentive to apply for patents only if commercial success is likely. Accordingly, we expect post-AIPA patents to be a better proxy for successful innovation activity, and thus to have a stronger effect on reducing the cost of debt than pre-AIPA patents. Indeed, we find that pre-AIPA patents reduce the cost of debt only for the most innovative firms, while post-AIPA, this effect holds for all firms.</p>}},
  author       = {{Hoffmann, Arvid O.I. and Kleimeier, Stefanie and Mimiroglu, Nagihan and Pennings, Joost M.E.}},
  issn         = {{1369-412X}},
  language     = {{eng}},
  month        = {{09}},
  number       = {{3}},
  pages        = {{641--651}},
  publisher    = {{Wiley-Blackwell}},
  series       = {{International Review of Finance}},
  title        = {{The American Inventors Protection Act : A Natural Experiment on Innovation Disclosure and the Cost of Debt}},
  url          = {{http://dx.doi.org/10.1111/irfi.12174}},
  doi          = {{10.1111/irfi.12174}},
  volume       = {{19}},
  year         = {{2019}},
}