The disclosure function of the U.S. patent system: evidence from the PTDL program and extreme snowfall
Review of Accounting Studies, forthcoming
36 Pages Posted: 19 Apr 2019 Last revised: 3 Sep 2021
Date Written: September 3, 2021
Are retail investors using uncurated disclosures in form of patents for their investment decisions? This study uses the investment decisions of retail investors and variation in the local availability of patent information to answer this question. The variation comes from changes in the locations of U.S. Patent and Trademark Depository Libraries over time. I find a strong increase in the local trading volume of stocks after the release of a patent in counties that have easier access to patent information. In addition, trades made by retail investors with easier access to this information yield higher returns, compared to trades made by other investors. These results indicate that disclosures of the U.S. Patent and Trademark Office facilitate the dissemination of patent information to retail investors. Furthermore, these results suggest that retail investors complement traditional curated disclosures with uncurated disclosures in form of patents.
Keywords: Corporate disclosure; Information and knowledge; Innovation; Communication; Diffusion processes
JEL Classification: M410; G530; D830; O340; O330; G110
Suggested Citation: Suggested Citation