Patent Quality, Firm Value, and Investor Underreaction: Evidence from Patent Examiner Busyness

64 Pages Posted: 11 Mar 2018 Last revised: 4 Aug 2021

See all articles by Tao Shu

Tao Shu

The Chinese University of Hong Kong, Shenzhen; Shenzhen Finance Institute

Xuan Tian

Tsinghua University - PBC School of Finance

Xintong Zhan

Department of Finance, School of Management, Fudan University

Date Written: August 4, 2021

Abstract

This paper attempts to study the causal effect of examiner busyness on patent quality and firm value. Using a broad set of patent quality measures, we document strong evidence that patents allowed by busy examiners exhibit significantly lower quality. Further, examiner busyness of firms’ patents negatively predicts the firms’ future stock returns, which is consistent with investor underreaction to examiner busyness. Examiners’ experience helps attenuate the negative effect of examiner busyness.

Keywords: patent quality, examiner busyness, stock returns, investor underreaction.

JEL Classification: G14, G32, G41, O31

Suggested Citation

Shu, Tao and Tian, Xuan and Zhan, Xintong, Patent Quality, Firm Value, and Investor Underreaction: Evidence from Patent Examiner Busyness (August 4, 2021). PBCSF-NIFR Research Paper, Available at SSRN: https://ssrn.com/abstract=3137894 or http://dx.doi.org/10.2139/ssrn.3137894

Tao Shu

The Chinese University of Hong Kong, Shenzhen ( email )

Shenzhen Finance Institute ( email )

Xuan Tian

Tsinghua University - PBC School of Finance ( email )

No. 43, Chengfu Road
Haidian District
Beijing 100083
China
+86-10-62794103 (Phone)

HOME PAGE: http://xuantian.info/

Xintong Zhan (Contact Author)

Department of Finance, School of Management, Fudan University ( email )

No. 670, Guoshun Road
No.670 Guoshun Road
Shanghai, 200433
China

HOME PAGE: http://sites.google.com/view/xintongzhan

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