Patent Pledgeability and Corporate Innovation
51 Pages Posted: 14 Jun 2022
Date Written: June 9, 2022
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: Suggested Citation