Patent Litigation, Competitive Dynamics, and Stock Market Volatility

Kuang-Hsun Shih, Fu-Ju Yang, Jhih-Ta Shih and Yi-Hsien Wang
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Kuang-Hsun Shih: CTBC Business School, Tainan 709, Taiwan
Fu-Ju Yang: Department of Banking and Finance, Chinese Culture University, Taipei 111, Taiwan
Jhih-Ta Shih: Department of Banking and Finance, Chinese Culture University, Taipei 111, Taiwan
Yi-Hsien Wang: Department of Banking and Finance, Chinese Culture University, Taipei 111, Taiwan

Mathematics, 2020, vol. 8, issue 5, 1-17

Abstract: Recently, the number of patents of enterprises has been increasing year by year, obviously improving the degree of attention paid to the added value of patents by said enterprises, but also creating patent infringement lawsuits. First, through analysis of the position of competitors, it can be seen that the disclosure of patent infringement litigation information influences the abnormal returns of shareholder wealth. Second, through projecting to competitive dynamics, it could be determined whether expected or actual action are consistent or inconsistent, and whether the stock returns and volatilities are obviously changed. This work utilized event study and GJR-GARCH to discuss the information value of short-term abnormal returns and the long-term effect of stock returns and volatilities of patent infringement lawsuits, respectively. The empirical results of this article highlight the significantly negative short-term abnormal returns of plaintiffs when market commonality between the enterprises was higher. In addition, the cumulative abnormal returns of shareholders were reduced when the resource similarity was higher. Finally, in terms of the corresponding plaintiff enterprises, if the expected theory and the actual strategy were inconsistent, then the return and the risk decreased significantly; however, when the strategy was consistent, the return and the risk increased significantly.

Keywords: patent infringement lawsuits; market commonality; resource similarity (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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