Disclosure, Patenting, and Trade Secrecy

Journal of Accounting Research, 0[10.1111/1475-679X.12580]

80 Pages Posted: 19 Jan 2021 Last revised: 23 Oct 2024

See all articles by Arnoud W. A. Boot

Arnoud W. A. Boot

University of Amsterdam - Amsterdam Business School; Centre for Economic Policy Research (CEPR); Tinbergen Institute

Vladimir Vladimirov

University of Amsterdam Business School; Centre for Economic Policy Research (CEPR); Finance Theory Group (FTG)

Multiple version iconThere are 2 versions of this paper

Date Written: June 02, 2024

Abstract

Patent applications often reveal proprietary information to competitors, but does such disclosure harm firms or also benefit them? We develop and empirically support a theory showing that when firms patent enhancements to incumbent, non-disruptive technologies, they can cooperate more easily on these technologies, increasing their profitability. The downside of cooperating on non-disruptive technologies is that the investment in and commitment to disruptive technologies decline. To improve their commitment to disruptive technologies, some firms rely more on trade secrecy. We provide empirical support for these predictions. We document that after a patent reform that made information about patent applications widely accessible, firms cooperate more and charge higher markups. Furthermore, the nature of patented innovation has changed, with the proportion of non-disruptive patents increasing substantially. Finally, while some firms start patenting more, others patent less and rely more on trade secrecy, with the response depending on the attractiveness of firms' innovation prospects.

Keywords: disclosure, patenting, trade secrecy, competition, cooperation, innovation, disruptive investments, breakthrough innovation

JEL Classification: G31, G32, L41, O31, M40

Suggested Citation

Boot, Arnoud W. A. and Vladimirov, Vladimir, Disclosure, Patenting, and Trade Secrecy (June 02, 2024). Journal of Accounting Research, 0[10.1111/1475-679X.12580], Available at SSRN: https://ssrn.com/abstract=3741208 or http://dx.doi.org/10.1111/1475-679X.12580

Arnoud W. A. Boot

University of Amsterdam - Amsterdam Business School ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands
+31 20 525 4162 (Phone)
+31 20 525 5318 (Fax)

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Vladimir Vladimirov (Contact Author)

University of Amsterdam Business School ( email )

Roetersstraat 18
Amsterdam, 1018WB
Netherlands

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Finance Theory Group (FTG) ( email )

United States

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