Patent trolls and capital structure decisions in high-tech firms
Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review
Author(s)
Related Research Unit(s)
Detail(s)
Original language | English |
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Article number | 106987 |
Journal / Publication | Journal of Banking and Finance |
Volume | 155 |
Online published | 29 Aug 2023 |
Publication status | Published - Oct 2023 |
Link(s)
Abstract
Under the growing threat of patent trolls, high-tech firms face substantial legal fees, increased cash flow volatility, and greater expected costs of distress. I show that the exposure to patent litigation leads to overly conservative capital structures in high-tech firms. My identification exploits a 2017 U.S. Supreme Court decision limiting the ability of patent trolls to seek favorable venue outside the defendant's incorporating state. Following the decision, firms incorporated in states with strong anti-patent troll laws increased leverage. The effects are driven by high-tech firms, the premier targets of patent trolls. Decreased cash flow volatility, especially in treated firms closer to financial distress, provides a key economic channel for my results. © 2023 Elsevier B.V.
Research Area(s)
- Capital structure, Innovation, Law and finance, NPEs, Patent trolls, Patents
Bibliographic Note
Full text of this publication does not contain sufficient affiliation information. With consent from the author(s) concerned, the Research Unit(s) information for this record is based on the existing academic department affiliation of the author(s).
Citation Format(s)
Patent trolls and capital structure decisions in high-tech firms. / Duan, Ran.
In: Journal of Banking and Finance, Vol. 155, 106987, 10.2023.
In: Journal of Banking and Finance, Vol. 155, 106987, 10.2023.
Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review