Published papers

Intellectual Property Rights and Debt Financing, Review of Financial Studies  (2023)

I examine how the investment and financing of innovation are affected by the contractual allocation of intellectual property rights using a Federal Circuit ruling that increased firms' property rights to employee patents. I find that treatment firms' total debt-to-assets ratio and R&D spending increase by 18% and 9%, respectively, as the residual control over patents increases firms' incentives to innovate. These effects are more pronounced when ex-ante holdup exposure is high. Furthermore, I find a positive marginal effect of asset complementarity as it helps limit the decline in employee incentives. Consistently, I also show that firms' ex-post asset complementarity improves.

Working papers

Patent Hunters (with Lauren Cohen, Umit Gurun, and Katie Moon)

Analyzing millions of patents granted by the USPTO between 1970 and 2020, we find a pattern where specific patents only rise to prominence after considerable time has passed. Amongst these late-blooming influential patents, we show that there are key players (patent hunters) who consistently identify and develop them. Although initially overlooked, these late-bloomer patents have significantly more influence on average than early recognized patents, and open significantly broader new markets and innovative spaces. For instance, they are associated with a 15.6% increase in patenting in the late-bloomer’s technology space. Patent hunters, as early detectors and adopters of these late-blooming patents, are also associated with significant positive rents. Their adoption of these overlooked patents is associated with a 22% rise in sales growth, a 3% increase in Tobin’s Q , and a 4.8% increase in new product offerings. Interestingly, these rents associated with patent hunting on average exceed those of the original patent creators themselves. Patents hunted tend to be closer to the core technology of the hunters, more peripheral to the writers, and to be in less competitive spaces. Lastly, patent hunting appears to be a persistent firm characteristic and to have an inventor-level component as well.

Inter-firm Patent Litigation and Innovation Competition (with Jongsub Lee and Seungjoon Oh) R&R at Research Policy

Using novel inter-firm patent litigation data, we show a significant interplay between intellectual property rights' boundaries and product market dynamics. Instrumenting the probability of patent litigation with the passage of China's National Intellectual Property Strategy, we find that patent litigation reduces defendant firms' innovation activity and fosters more exploitative innovation strategy that leverages past experience and expertise. These effects strengthen with product market overlap between litigants. We also find that patent litigation intensifies product market competition among close rivals but results in a dispersed firm distribution within industry, inducing an industry structure where Schumpeterian effect of competition is more likely.

Who Finances Disparate Startups? (with S. Katie Moon) 

New startup formations have become more geographically dispersed with greater regional industry diversity. Using detailed startup information from Crunchbase, we show that such diminishing industrial agglomeration trend is driven by angel financing. This trend is tied to angels’ unique portfolio selection of startups that is distinct from venture capitals’ approach. Specifically, angels who are intolerant of geographic distance prefer to invest in startups from diverse industries, while venture capitalists make industry-concentrated investments with geographic flexibility. Finally, we show that angels’ portfolio selection of disparate startups enhances their performance and plays an important economic role in shaping the regional entrepreneurial ecosystem.

How does financing affect R&D responses to import penetration? (with Sreedhar Bharath)

We examine the impact of Chinese import penetration on U.S. firms' R&D investment and subsequent performance, conditional on the access to financing. When import penetration rises, we find that old-highQ firms raise more debt while young-highQ firms raise more equity. Subsequently, young-highQ firms’ R&D investment, product differentiation and financial market performance decline. In contrast, old-highQ firms increase their in-process R&D but suffer declines in their accounting performance. We conclude that capital market funding is critical for young-highQ firms to continue R&D and capital investments to survive import competition. In particular, young-highQ firms that secure funding ex-ante are also financially successful.

True Patent Citations and Inventor Mobility (with Katie Moon and Guanqun Zhou)

We show that in-text patent citation is superior in capturing the true underlying technology-based knowledge spillover of patents. The widely used front-page patent citation measure is relatively more noisy measure of the value of underlying technology as it is biased by the strategic patent litigation propensity. We use our in-text citation measure to show that it is positively and statistically significantly associated with the inventor mobility and technology-driven acquisitions.