The Paradox of Innovation Nondisclosure: Evidence from Licensing Contracts

Gaurav Kankanhalli, Alan Kwan and Kenneth Merkley

American Economic Journal: Applied Economics, 2024, vol. 16, issue 4, 220-56

Abstract: Innovative firms must trade off disclosing to investors and maintaining secrecy from competitors. We study this trade-off in a sample of IP licenses mandatorily disclosed by US public firms, whose contents can be temporarily redacted. Hand classifying the redacted information, we find that firms with valuable IP in competitive markets redact IP information more often. Markets react positively to the redaction of IP information, consistent with theoretical predictions rationalizing a separating equilibrium in which nondisclosure signals more valuable IP. Our results suggest that credible nondisclosure partially resolves information frictions for innovative public firms when facilitated by sophisticated investors.

JEL-codes: D22 D82 G38 L24 O32 O34 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/app.20230046 (application/pdf)
https://doi.org/10.3886/E194388V1 (text/html)
https://www.aeaweb.org/doi/10.1257/app.20230046.appx (application/pdf)
https://www.aeaweb.org/doi/10.1257/app.20230046.ds (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aejapp:v:16:y:2024:i:4:p:220-56

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

DOI: 10.1257/app.20230046

Access Statistics for this article

American Economic Journal: Applied Economics is currently edited by Alexandre Mas

More articles in American Economic Journal: Applied Economics from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().