Patent Pledgeability and Corporate Innovation

51 Pages Posted: 14 Jun 2022

See all articles by Yanke Dai

Yanke Dai

Formerly Known as Shanghai Institute of Foreign Trade

Ting Du

Central University of Finance and Economics (CUFE) - China Academy of Public Finance and Public Policy (CAPFPP)

Huasheng Gao

Fanhai International School of Finance, Fudan University

Yan Gu

Fudan University - Fanhai International School of Finance (FISF)

Date Written: June 9, 2022

Abstract

We identify a positive causal effect of patent pledgeability on corporate patenting. Our tests exploit the staggered city-level policy change, which allows firms to use patents as collateral for financing. We find a significant increase in patents and patent citations for firms headquartered in cities that have adopted such policies relative to firms headquartered in cities that have not. We further show that patent pledgeability increases corporate patenting through the channel of inducing firms to shift from secrecy-based innovation to patent-based innovation, rather than the channel of mitigating financial constraints.

Keywords: Innovation; Patent collateral; Pledgeability; Secrecy; Intangible assets

JEL Classification: G38

Suggested Citation

Dai, Yanke and Du, Ting and Gao, Huasheng and Gu, Yan, Patent Pledgeability and Corporate Innovation (June 9, 2022). Available at SSRN: https://ssrn.com/abstract=4132148 or http://dx.doi.org/10.2139/ssrn.4132148

Yanke Dai

Formerly Known as Shanghai Institute of Foreign Trade ( email )

No. 1900, Wenxiang Road
Shanghai, 201620
China

Ting Du

Central University of Finance and Economics (CUFE) - China Academy of Public Finance and Public Policy (CAPFPP) ( email )

39 South College Road
Haidian District
Beijing, Beijing 100081
China

Huasheng Gao (Contact Author)

Fanhai International School of Finance, Fudan University ( email )

Beijing West District Baiyun Load 10th
Shanghai, 100045
China
2165642222 (Phone)
2165642222 (Fax)

Yan Gu

Fudan University - Fanhai International School of Finance (FISF) ( email )

220 Handan Road
Shanghai, 200433
China

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