|
|
|
| Drivers of Early Patent Publication in Capital Markets: The Takeover Pressure Perspective |
| PAN Yue, LIN Shuping, ZHANG Pengdong
|
School of Economics, Xiamen University;
Center for Accounting, Finance and Institutions/School of Business, Sun Yat-Sen University |
|
|
|
Abstract Mergers and acquisitions (M&A) are common economic activities that are essential for the efficient allocation of social resources. As China's capital market has matured, M&A activities by listed companies have become frequent. However, research on the M&A activities of Chinese listed firms mainly focuses on how the reform of the corporate control market or the within-firm adoption of anti-takeover provisions affects firm value. How firms respond to increased takeover pressure has not been fully explored. More recently, voluntary disclosure has been identified as a firm strategy for dealing with takeover pressure. By changing information disclosure, firms can reduce the likelihood of being acquired or strive to gain higher price premiums in future M&A deals.
This paper studies whether firms respond to rising takeover pressure by adjusting the timing of the publication of their invention patents. In China, by default, invention patents are published by the China National Intellectual Property Administration (CNIPA) 18 months after filing, making the patent specification and other relevant details available to the public. However, inventors can also request early publication of their patents, which means that they can decide at what point within the 18-month period to publish their patents. As innovation is closely related to firm value, timely disclosure of innovation achievements can alleviate undervaluation of the firm. However, different ways of disclosing innovation information may alleviate information asymmetry in different ways: compared with announcements, conference calls, and other traditional forms of voluntary disclosure, the publication of patents is done through official agencies and can help outsiders learn the details of patents quickly. The information about innovation achievements is thus more comprehensive and credible, and should accordingly have a more significant influence on firm valuation. Therefore, we expect that firms may time their patent publications to deal with takeover pressures.
We first estimate the takeover pressure faced by listed companies, following the literature (e.g., Billett and Xue, 2007; Cremers et al., 2009). Next, we conduct an empirical test based on 77,276 invention patent samples of listed companies from 2007 to 2016. We find that firms publish their patents earlier when takeover pressure increases. Mechanism tests show that the early publication of patents can increase the abnormal returns of stocks, thus reducing the probability of being targeted in the future or increasing the price premium that can be obtained from future M&A transactions. Further research shows that when takeover pressure increases, firms with more analyst coverage and a higher proportion of venture investors are more likely to publish patents in advance; firms are more likely to select high-quality patents and those involving mature technology for publication; and when there are alternative strategies, the effect of takeover pressure on patent publication is weakened. The results remain robust when we use instrumental variable analysis and two exogenous shocks to takeover pressure to deal with the endogeneity problem. Finally, accelerating patent publication because of rising takeover pressure helps improve peer companies' innovation efficiency.
This paper contributes to several strands of the literature. First, we expand the literature that considers voluntary disclosure as a strategy for coping with takeover pressure. Unlike previous research that focuses only on traditional voluntary disclosure (Healy, 2015; Chen et al., 2022), we show that patent publication, as a unique form of information disclosure, can be used as an effective coping strategy. Second, this paper enriches research on patent publication from the perspective of the capital market. Previous studies mainly focus on the impact of the technology market and product market pressure on patent publications (Glaeser and Landsman, 2021). From the perspective of M&A, we document that pressure from the capital market can also affect firms' patent publication decisions.
This paper has valuable policy implications. First, there is still no agreement on whether an active M&A market should be encouraged. We provide direct evidence to support the bright side of takeover pressure, which contributes to the overall assessment of active M&A activities. Second, aside from encouraging increased innovation input, it is very important to improve innovation efficiency. This paper provides new insights for improving a society's overall innovation efficiency, which can promote economic growth.
|
|
Received: 18 February 2021
Published: 01 September 2022
|
|
|
|
|
| [1] |
陈冬、范蕊和梁上坤,2016,《谁动了上市公司的壳？——地方保护主义与上市公司壳交易》,《金融研究》第7期,第176～190页。
|
| [2] |
陈仕华和李维安,2016,《并购溢价决策中的锚定效应研究》,《经济研究》第6期,第114～127页。
|
| [3] |
陈玉罡和石芳,2014,《反收购条款、并购概率与公司价值》,《会计研究》第2期,第34～40页。
|
| [4] |
戴亦一、张鹏东和潘越,2019,《老赖越多,贷款越难？——来自地区诚信水平与上市公司银行借款的证据》,《金融研究》第8期,第77～95页。
|
| [5] |
董静、汪江平、翟海燕和汪立,2017,《服务还是监控:风险投资机构对创业企业的管理——行业专长与不确定性的视角》,《管理世界》第6期,第82～103+187～188页。
|
| [6] |
姜军、江轩宇和伊志宏,2020,《企业创新效率研究——来自股权质押的影响》,《金融研究》第2期,第128～146页。
|
| [7] |
李诗、洪涛和吴超鹏,2012,《上市公司专利对公司价值的影响——基于知识产权保护视角》,《南开管理评论》第6期,第4～13页。
|
| [8] |
陆瑶,2010,《激活公司控制权市场对中国上市公司价值的影响研究》,《金融研究》第7期,第144～157页。
|
| [9] |
潘越、林淑萍、张鹏东和戴亦一,2021,《语言将来时态标记特征与公司股利政策——基于投资者语言认知效应的跨国研究》,《经济研究》第7期,第127～143页。
|
| [10] |
潘越、刘承翊、林淑萍和张鹏东,2022,《风险资本的治理效应:来自IPO暂停的证据》,《中国工业经济》第5期,第121～139页。
|
| [11] |
谭小芬和钱佳琪,2020,《资本市场压力与企业策略性专利行为:卖空机制的视角》,《中国工业经济》第5期,第156～173页。
|
| [12] |
薛祖云和王冲,2011,《信息竞争抑或信息补充:证券分析师的角色扮演——基于我国证券市场的实证分析》,《金融研究》第11期,第167～182页。
|
| [13] |
姚益龙、刘巨松和刘冬,2014,《要素市场发展差异、产权性质与异地并购绩效》,《南开管理评论》第5期,第102～111页。
|
| [14] |
叶静怡、李晨乐、雷震和曹和平,2012,《专利申请提前公开制度、专利质量与技术知识传播》,《世界经济》第8期,第115～133页。
|
| [15] |
应千伟和何思怡,2022,《政府研发补贴下的企业创新策略:“滥竽充数”还是“精益求精”》,《南开管理评论》第2期,第57～69页。
|
| [16] |
Balakrishnan, K., Mary B. Billings, B. Kelly, and A. Ljungqvist. 2014. “Shaping Liquidity: On the Causal Effects of Voluntary Disclosure”, The Journal of Finance, 69(5):2237～2278.
|
| [17] |
Billett, Matthew T., and H. Xue. 2007. “The Takeover Deterrent Effect of Open Market Share Repurchases”, The Journal of Finance, 62 (4):1827～1850.
|
| [18] |
Carline, Nicholas F., and S. Gogineni. 2021. “Antitakeover Provisions and Investment in Mergers and Acquisitions: A Causal Reevaluation”, Journal of Corporate Finance, 69: 101962.
|
| [19] |
Chen, Sheng-Syan, Ching-Yu Hsu, and Chia-Wei Huang. 2016. “The White Squire Defense: Evidence from Private Investments in Public Equity”, Journal of Banking and Finance, 64:16～35.
|
| [20] |
Chen, S., B. Miao, and K. Valentine. 2022. “Corporate Control Contests and the Asymmetric Disclosure of Bad News: Evidence from Peer Firm Disclosure Response to Takeover Threat”, The Accounting Review, 97(1):123～146.
|
| [21] |
Cremers, K. J. Martijn, Vinay B. Nair, and K. John. 2009. “Takeovers and the Cross-Section of Returns”, Review of Financial Studies, 22 (4):1409～1445.
|
| [22] |
Dhaliwal, Dan S., Oliver Z. Li, A. Tsang, and Yong G. Yang. 2011. “Voluntary Nonfinancial Disclosure and the Cost of Equity Capital: The Initiation of Corporate Social Responsibility Reporting”, The Accounting Review, 86(1):59～100.
|
| [23] |
Frésard, L., G. Hoberg, and Gordon M. Phillips. 2020. “Innovation Activities and Integration through Vertical Acquisitions”, The Review of Financial Studies, 33(7):2937～2976.
|
| [24] |
Glaeser, Stephen A., and Wayne R. Landsman. 2021. “Deterrent Disclosure”, The Accounting Review, 96(5):291～315.
|
| [25] |
Healy, Paul M. 2015. “Discussion of ‘On Guidance and Volatility’”, Journal of Accounting and Economics, 60 (2～3):136～140.
|
| [26] |
Healy, Paul M., and Krishna G. Palepu. 2001. “Information Asymmetry, Corporate Disclosure, and the Capital Markets: A Review of the Empirical Disclosure Literature”, Journal of Accounting and Economics, 31 (1～3): 405～440.
|
| [27] |
Hegde, D., B. Lev, and C. Zhu. 2018. “Patent Disclosure and Price Discovery”, SSRN Working Paper, No.3274837.
|
| [28] |
Hsu, David H., and Rosemarie H. Ziedonis. 2013. “Resources as Dual Sources of Advantage: Implications for Valuing Entrepreneurial-Firm Patents”, Strategic Management Journal, 34 (7):761～781.
|
| [29] |
Jandik, T., and J. Lallemand. 2017. “Do Capital Structure Adjustments by Takeover Targets Influence Acquisition Gains？”, Financial Review, 52 (2):171～198.
|
| [30] |
Lück, S., B. Balsmeier, F. Seliger, and L. Fleming. 2020. “Early Disclosure of Invention and Reduced Duplication: An Empirical Test”, Management Science, 66 (6):2677～2685.
|
| [31] |
Merkley, Kenneth J. 2014. “Narrative Disclosure and Earnings Performance: Evidence from R&D Disclosures”, The Accounting Review, 89 (2):725～757.
|
| [32] |
Mohammadi, A., M. Beyhaghi, and P. Khashabi. 2018. “Technology Disclosure and Capital Market Uncertainty: The Role of Patents”, Working Paper.
|
| [33] |
Ovtchinnikov, Alexei V., Syed W. Reza, and Y. Wu. 2020. “Political Activism and Firm Innovation”, Journal of Financial and Quantitative Analysis, 55 (3):989～1024.
|
| [34] |
Upadhyay, A., and H. Zeng. 2017. “Cash Holdings and the Bargaining Power of R&D-intensive Targets”, Review of Quantitative Finance and Accounting, 49 (4):885～923.
|
| [35] |
Zhao, Y., A. Allen, and I. Hasan. 2013. “State Antitakeover Laws and Voluntary Disclosure”, Journal of Financial and Quantitative Analysis, 48 (2):637～668.
|
|
|
|
