How Does Firms’ Innovation Disclosure Affect Their Banking Relationships?

Autor:	Alminas Žaldokas, Farzad Saidi
Rok vydání:	2021
Předmět:	Shock (economics) 050208 finance Strategy and Management 0502 economics and business 05 social sciences Secrecy Face (sociological concept) Business Monetary economics 050207 economics Management Science and Operations Research Affect (psychology) Private information retrieval
Zdroj:	Management Science. 67:742-768
ISSN:	1526-5501 0025-1909
DOI:	10.1287/mnsc.2019.3498
Popis:	Firms face a trade-off between patenting, thereby disclosing innovation, and secrecy. We show that this trade-off interacts with firms’ financing choices. As a shock to innovation disclosure, we study the American Inventor’s Protection Act that made firms’ patent applications public 18 months after filing, rather than when granted. We find that such increased innovation disclosure helps firms switch lenders, resulting in lower cost of debt, and facilitates their access to syndicated-loan and public capital markets. Our evidence lends support to the idea that public-information provision through patents and private information in financial relationships are substitutes, and that innovation disclosure makes credit markets more contestable. This paper was accepted by Gustavo Manso, finance.
Databáze:	OpenAIRE
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