Corporate innovation and future earnings: does early patent disclosure matter?

James M. Plečnik, Leo L. Yang and Joseph H. Zhang

Accounting and Finance, 2022, vol. 62, issue S1, 2011-2056

Abstract: This study investigates how pre‐grant patent disclosures required by the American Inventors Protection Act (AIPA) affect the value of innovation. The accelerated disclosures instituted by the AIPA may benefit innovative firms by either reducing duplicative R&D projects or by facilitating prompt, beneficial knowledge spillovers among firms. However, early innovation disclosures may result in proprietary costs and reduce competitive advantages. Our results indicate that when firms engage in quality innovation as captured by patent citations or originality, they have more efficient innovation output after the passage of the AIPA, and their innovation output is more strongly associated with future earnings.

Date: 2022
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