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Creditor Rights and Innovation: Evidence from Patent Collateral

William Mann

UCLA Anderson School

April 27, 2015

Using novel data recording patents pledged as collateral, I show that strong creditor rights facilitate the financing of innovation. In the United States in 2013, 40% of patenting firms had pledged their patents as collateral at some point, and these firms performed 28% of R&D and 22% of patenting. Employing the random timing of court decisions as a source of exogenous variation in creditor rights, I show that patenting companies raised more debt financing when creditor rights to patents strengthened. Consequently, investment and patenting output also increased, as did the technological diversity of the patents produced.

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Date posted: April 29, 2014 ; Last revised: April 28, 2015

Suggested Citation

Mann, William, Creditor Rights and Innovation: Evidence from Patent Collateral (April 27, 2015). 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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