Patent Disclosure and Price Discovery

53 Pages Posted: 4 Nov 2018 Last revised: 7 Nov 2018

See all articles by Deepak Hegde

Deepak Hegde

New York University (NYU) - Leonard N. Stern School of Business

Baruch Lev

New York University - Stern School of Business

Chenqi Zhu

New York University (NYU) - Leonard N. Stern School of Business

Date Written: October 18, 2018

Abstract

We focus in this study on the exogenous event of the enactment of American Inventor’s Protection Act of 1999 (AIPA), which disseminates timely, detailed, and credible public information on R&D activities through pre-grant patent disclosures. Exploiting the staggered timing of patent disclosures, we identify a significant improvement in the efficiency of stock price discovery. This improvement is stronger when patent disclosures reveal firms’ successful, new, or technologically valuable inventions. This improvement is more pronounced for firms in high-tech or fast-moving industries, or with a large institutional ownership or analyst coverage. We also find stock liquidity rises and investors’ risk perception of R&D drops after the enactment of AIPA. Our results highlight the importance of timely, detailed, and credible disclosures of R&D activities in alleviating the information problems faced by R&D-intensive firms.

Suggested Citation

Hegde, Deepak and Lev, Baruch Itamar and Zhu, Chenqi, Patent Disclosure and Price Discovery (October 18, 2018). Available at SSRN: https://ssrn.com/abstract=3274837 or http://dx.doi.org/10.2139/ssrn.3274837

Deepak Hegde

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Baruch Itamar Lev

New York University - Stern School of Business ( email )

40 West 4th Street, Suite 400
New York, NY 10012
United States
212-998-0028 (Phone)
212-995-4001 (Fax)

HOME PAGE: http://www.baruch-lev.com

Chenqi Zhu (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
92
rank
270,384
Abstract Views
377
PlumX Metrics