Abstract
This paper reexamines the effect of institutional ownership on corporate patent-based innovation. Using an updated sample, we confirm that higher institutional ownership leads to more innovations, including more citations received by patents of a firm, and higher patent generality and originality. However, we find that the impact of institutional ownership on patent-based innovation greatly decreases after the tech bubble bursts and this lower support is driven by both transient and non-transient institutional investors. We do not find that institutional investors intentionally lower their support of patent-based innovation for improving this less efficient innovation. Our results support the contention that the exorbitant litigation cost of patents lowers the incentives for institutional investors to invest in patent-based innovation after 2000.
| Original language | American English |
|---|---|
| Pages (from-to) | 149-164 |
| Number of pages | 16 |
| Journal | Journal of Empirical Finance |
| Volume | 51 |
| DOIs | |
| State | Published - Mar 2019 |
Keywords
- Innovation
- Institutional ownership
- Patent
- Patent cost