The innovation consequences of mandatory patent disclosures

By Jinhwan Kim, Kristen Valentine. Journal of Accounting & Economics, 2020

173 citations recorded by the source corpus.

Abstract We investigate the effect of patent disclosures on corporate innovation. Using the American Inventor’s Protection Act (AIPA) as a shock that increased patent disclosures, we find an increase in innovation for firms whose rivals reveal more information after the AIPA and a decrease in innovation for firms whose own disclosures are divulged to competitors as a result of the law. These findings suggest patent disclosures generate both spillover benefits and proprietary costs. Our findings provide justification for patent disclosure requirements by demonstrating positive externalities: rivals’ disclosures facilitate a firm’s innovation. However, we also highlight that mandatory patent disclosures can impose proprietary costs on firms. These results broadly contribute to our understanding of the real effects of disclosure, such that forcing firms to share proprietary information can be privately costly but beneficial to other firms.

Subfields: Accounting, Economics and Econometrics, Management of Technology and Innovation

View Paper: https://www.semanticscholar.org/paper/408a9e778f4679c9a1f25f6750b2891eb87fbfb7