TY - JOUR
T1 - The American Inventors Protection Act: A Natural Experiment on Innovation Disclosure and the Cost of Debt
AU - Hoffmann, Arvid O.I.
AU - Kleimeier, Stefanie
AU - Mimiroglu, Nagihan
AU - Pennings, Joost M.E.
PY - 2019/9
Y1 - 2019/9
N2 - We examine the impact of innovation disclosure through patenting on firms' cost of debt, focusing on the American Inventors Protection Act (AIPA) as an exogenous shock in innovation disclosure regulation. Post-AIPA, firms have an incentive to apply for patents only if commercial success is likely. Accordingly, we expect post-AIPA patents to be a better proxy for successful innovation activity, and thus to have a stronger effect on reducing the cost of debt than pre-AIPA patents. Indeed, we find that pre-AIPA patents reduce the cost of debt only for the most innovative firms, while post-AIPA, this effect holds for all firms.
AB - We examine the impact of innovation disclosure through patenting on firms' cost of debt, focusing on the American Inventors Protection Act (AIPA) as an exogenous shock in innovation disclosure regulation. Post-AIPA, firms have an incentive to apply for patents only if commercial success is likely. Accordingly, we expect post-AIPA patents to be a better proxy for successful innovation activity, and thus to have a stronger effect on reducing the cost of debt than pre-AIPA patents. Indeed, we find that pre-AIPA patents reduce the cost of debt only for the most innovative firms, while post-AIPA, this effect holds for all firms.
U2 - 10.1111/irfi.12174
DO - 10.1111/irfi.12174
M3 - Article
AN - SCOPUS:85040336429
SN - 1369-412X
VL - 19
SP - 641
EP - 651
JO - International Review of Finance
JF - International Review of Finance
IS - 3
ER -