Does knowledge protection benefit shareholders? : evidence from stock market reaction and firm investment in knowledge assets

Buhui Qiu and Teng Wang

This paper studies whether knowledge protection affects shareholder value and firms' investment in knowledge assets using the staggered adoptions and rejections of the inevitable disclosure doctrine (IDD) by U.S. state courts as exogenous changes in the level of knowledge protection. We find positive (negative) abnormal stock returns around the IDD adoption (rejection) day for firms headquartered in the state and uncover a positive IDD treatment effect on firms' investment in knowledge assets. Moreover, the effects on stock returns and knowledge assets investment are stronger in more knowledge-oriented industries and firms. Finally, enhancing knowledge protection does not discourage local entrepreneurial activity

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Year of publication:	February 2017
Authors:	Qiu, Buhui ; Wang, Teng
Publisher:	Washington, D.C. : Divisions of Research & Statistics and Monetary Affairs, Federal Reserve Board
Subject:	Knowledge Protection \| Inevitable Disclosure Doctrine \| Shareholder Value \| Investment in Knowledge Assets \| Wissen \| Knowledge \| Shareholder value \| Immaterielle Werte \| Intangible assets \| Börsenkurs \| Share price \| Wissensmanagement \| Knowledge management \| Aktionäre \| Shareholders \| Investitionsentscheidung \| Investment decision \| Ankündigungseffekt \| Announcement effect \| Aktienmarkt \| Stock market