 Patent pledge policy and stock price crash risk: Evidence from ChinaLinlin Xie, Guangqiang Liu and Boyang Liu Research in International Business and Finance, 2023, vol. 65, issue C Abstract: This study examines the influence of China’s patent pledge policy on the stability of stock prices for Chinese listed businesses. We find that when businesses use patent rights as collateral for loans, the probability of stock price crash increases. Additionally, this unfavorable effect is more pronounced in businesses with strong financial standing, excessive managerial confidence, and serious agency problems than in businesses with weak financial standing, non-excessive managerial confidence, and non-serious agency problems. Indeed, a mechanism analysis reveals that the patent pledge policy aggravates management’s excessive investment and contributes to stock price instability. Furthermore, the pledge financing process and corporate financing goals are not sufficiently transparent and lack internal and external supervision, due to the challenges associated with determining the value of patent rights, the lack of awareness of risk control in the pledge process, and the imperfections in pertinent policies and systems. Keywords: Patent pledge policy; Stock price crash risk; Inefficient investment; Corporate governance (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:65:y:2023:i:c:s0275531923000934 DOI: 10.1016/j.ribaf.2023.101967 Access Statistics for this article Research in International Business and Finance is currently edited by T. Lagoarde Segot More articles in Research in International Business and Finance from Elsevier |
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