Brand Innovation and Informed Trading

62 Pages Posted: 16 Oct 2019 Last revised: 4 Mar 2022

See all articles by SeungOh Han

SeungOh Han

Sejong University; State University of New York (SUNY) - Buffalo; Wenzhou-Kean University

Po-Hsuan Hsu

National Tsing Hua University - Department of Quantitative Finance; National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER)

Sahn-Wook Huh

State University of New York (SUNY) - Department of Finance

Chao-Jhih Liu

State University of New York (SUNY) - Buffalo

Date Written: March 1, 2022

Abstract

We first show that brand innovation measured by trademark registrations (TMRs) is a prominent corporate event involving material information and hence perceivable through changes in volatility, liquidity, and prices. Firms with more TMRs have higher sales growth and Tobin’s Q. With high-frequency measures of informed trading, we provide evidence that informed investors actively trade on TMR news: TMRs are positively associated with the price impacts and the posterior probability of informed buying. Our DiD analyses based on exogenous shocks induced by regulation changes support our interpretations. Frictions in the registration process decrease the extent of informed trading, and the effect of TMRs on informed trading is heterogeneous across firms.

Keywords: Trademark Registrations; Brand Innovation; Informed Trading; Price Impacts; Posterior Probability of Informed Buying and Selling; Directional Price Impacts

JEL Classification: E22; G12; G14; O34

Suggested Citation

Han, SeungOh and Han, SeungOh and Hsu, Po-Hsuan and Huh, Sahn-Wook and Liu, Chao-Jhih, Brand Innovation and Informed Trading (March 1, 2022). Available at SSRN: https://ssrn.com/abstract=3465304 or http://dx.doi.org/10.2139/ssrn.3465304

SeungOh Han

Sejong University ( email )

Seoul
Korea, Republic of (South Korea)

Wenzhou-Kean University ( email )

88 Daxue Rd
Ouhai
Wenzhou, Zhejiang
China

State University of New York (SUNY) - Buffalo ( email )

12 Capen Hall
Buffalo, NY 14260
United States

Po-Hsuan Hsu

National Tsing Hua University - Department of Quantitative Finance ( email )

101, Section 2, Kuang-Fu Road
Hsinchu, Taiwan 300
China

National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER) ( email )

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

Sahn-Wook Huh (Contact Author)

State University of New York (SUNY) - Department of Finance ( email )

347 Jacobs Management Center
Buffalo, 14260-4000
United States
716-645-5435 (Phone)
716-645-3823 (Fax)

HOME PAGE: https://sites.google.com/site/sahnwookhuh/home

Chao-Jhih Liu

State University of New York (SUNY) - Buffalo ( email )

Amherst, NY 14260
United States

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