Patents and corporate credit risk
(2019) In Industrial and Corporate Change- Abstract
- A vast literature documents a positive relationship between patents and companies stock market performance. Nevertheless, evidence on the influence of patents on companies’ debt capacity remains sparse. In this article, we examine the relationship between companies’ patent portfolios and their credit rating, providing relevant, albeit indirect, evidence on patents as a debt funding mechanism. Using a panel dataset on 155 U.S. firms, we find a positive relationship between companies’ credit rating and the size of their patent portfolio. Our indicators for valuable patents, however, provide a mixed picture. While there is a positive link between the average family size of a company’s patent portfolio and its credit ratings, we surprisingly... (More)
- A vast literature documents a positive relationship between patents and companies stock market performance. Nevertheless, evidence on the influence of patents on companies’ debt capacity remains sparse. In this article, we examine the relationship between companies’ patent portfolios and their credit rating, providing relevant, albeit indirect, evidence on patents as a debt funding mechanism. Using a panel dataset on 155 U.S. firms, we find a positive relationship between companies’ credit rating and the size of their patent portfolio. Our indicators for valuable patents, however, provide a mixed picture. While there is a positive link between the average family size of a company’s patent portfolio and its credit ratings, we surprisingly find a significant negative relationship between patent forward citations and companies ratings. We hypothesize that this finding is the result of citations being associated with patent lawsuits, potentially incurring substantial losses on creditors. (Less)
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/7bd36c7a-d194-46d8-b17f-f72411831405
- author
- Frey, Carl Benedikt LU ; Neuhausler, Peter and Blind, Knut
- publishing date
- 2019
- type
- Contribution to journal
- publication status
- published
- subject
- in
- Industrial and Corporate Change
- publisher
- Oxford University Press
- external identifiers
-
- scopus:85116135062
- ISSN
- 0960-6491
- DOI
- 10.1093/icc/dtz040
- language
- English
- LU publication?
- no
- id
- 7bd36c7a-d194-46d8-b17f-f72411831405
- date added to LUP
- 2019-10-25 14:02:50
- date last changed
- 2022-04-18 18:35:22
@article{7bd36c7a-d194-46d8-b17f-f72411831405, abstract = {{A vast literature documents a positive relationship between patents and companies stock market performance. Nevertheless, evidence on the influence of patents on companies’ debt capacity remains sparse. In this article, we examine the relationship between companies’ patent portfolios and their credit rating, providing relevant, albeit indirect, evidence on patents as a debt funding mechanism. Using a panel dataset on 155 U.S. firms, we find a positive relationship between companies’ credit rating and the size of their patent portfolio. Our indicators for valuable patents, however, provide a mixed picture. While there is a positive link between the average family size of a company’s patent portfolio and its credit ratings, we surprisingly find a significant negative relationship between patent forward citations and companies ratings. We hypothesize that this finding is the result of citations being associated with patent lawsuits, potentially incurring substantial losses on creditors.}}, author = {{Frey, Carl Benedikt and Neuhausler, Peter and Blind, Knut}}, issn = {{0960-6491}}, language = {{eng}}, publisher = {{Oxford University Press}}, series = {{Industrial and Corporate Change}}, title = {{Patents and corporate credit risk}}, url = {{http://dx.doi.org/10.1093/icc/dtz040}}, doi = {{10.1093/icc/dtz040}}, year = {{2019}}, }