Knocking off Firm Value

68 Pages Posted: 29 Aug 2018 Last revised: 15 May 2019

See all articles by Mehmet Canayaz

Mehmet Canayaz

Pennsylvania State University - Smeal College of Business

Umit Gurun

University of Texas at Dallas

Date Written: May 8, 2019


A central question in intellectual property (IP) literature is whether government intervention helps IP owners enjoy benefits of their trademarked brands, patented inventions or copyrighted works. We contribute to this debate by examining how the U.S. government’s anti-counterfeiting enforcement on foreign countries affects U.S. firms. We present evidence that firms significantly reduce capital and R&D investments when their products are protected from counterfeiting activities. Anti-counterfeiting enforcements are also associated with increases in profit margins and valuations. Using a unique dataset on brand perceptions, we present evidence that anti-counterfeiting enforcements significantly boost brand perceptions of U.S. firms overseas. Out-of-sample tests on non-U.S. brands confirm the benefits of the U.S. government’s anti-counterfeiting enforcements on brand perceptions.

Keywords: Corporate investment, product market competition, counterfeit products, piracy, special 301 reports, brand value

JEL Classification: G15, G34, G31, M41

Suggested Citation

Canayaz, Mehmet and Gurun, Umit, Knocking off Firm Value (May 8, 2019). Available at SSRN: or

Mehmet Canayaz (Contact Author)

Pennsylvania State University - Smeal College of Business ( email )

University Park, PA 16802
United States

Umit Gurun

University of Texas at Dallas ( email )

2601 North Floyd Road
Richardson, TX 75083
United States


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