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Creditor Rights and Innovation: Evidence from Patent Collateral

William Mann

UCLA Anderson School

July 13, 2016

I show that patents are pledged as collateral to raise significant debt financing, and that the pledgeability of patents contributes to the financing of innovation. In 2013, 38% of US patenting firms had pledged their patents as collateral at some point, and these firms performed 20% of R&D and patenting in Compustat. Employing court decisions as a source of exogenous variation in creditor rights, I show that patenting companies raised more debt, and spent more on R&D, when creditor rights to patents strengthened. Subsequently, these companies exhibited a gradual increase in patenting output.

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Date posted: April 29, 2014 ; Last revised: July 14, 2016

Suggested Citation

Mann, William, Creditor Rights and Innovation: Evidence from Patent Collateral (July 13, 2016). Available at SSRN: http://ssrn.com/abstract=2356015 or http://dx.doi.org/10.2139/ssrn.2356015

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William Mann (Contact Author)
UCLA Anderson School ( email )
United States

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