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Public firm disclosures and the market for innovation

Jinhwan Kim and Kristen Valentine

Journal of Accounting and Economics, 2023, vol. 76, issue 1

Abstract: We examine the spillover effect of public firm disclosures on the patent trading market. The patent market is rife with information frictions, yet can potentially facilitate the reallocation of innovation to the most productive users. We find that going from the 25th percentile to the 75th percentile in public firm presence – our proxy for public firm disclosures – is linked to a 9.4% increase in other related parties' future patent sales. The positive link between public firm presence is stronger where information asymmetry is greatest and where information uncertainty prevails relative to transactions less likely to suffer from information frictions. Tests exploiting cross-sectional variation and public firms' EDGAR implementation corroborate the resolution of information frictions as a mechanism. Additional tests reveal financial statement disclosure as an important information source facilitating patent sales. Our results speak to an important and underexplored externality of public firm disclosures – its contribution to the patent market.

Keywords: Corporate disclosures; Public firm presence; Spillovers; Patent markets; Innovation (search for similar items in EconPapers)
JEL-codes: D23 M40 M41 O30 O31 O32 O34 O39 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:76:y:2023:i:1:s0165410123000010

DOI: 10.1016/j.jacceco.2023.101577

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Journal of Accounting and Economics is currently edited by J. L. Zimmerman, S. P. Kothari, T. Z. Lys and R. L. Watts

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