Abstract
Drawing on insights from the strategic patenting perspective, we examine the impact of debtor-friendly institutional policy on the innovation behavior of firms. We argue that while conventional wisdom indicates the negative impact of debt on patent counts, debt financing based on a set of weak creditor rights may lead firms to apply for more patents at the expense of the innovativeness of those patents. By analyzing financial data and patenting information of the Chinese listed firms, we show that debt financing motivates firms to apply for more patents while both R&D intensity and the portion of innovative patent applications diminish. These effects are more pronounced among firms more adversely exposed to China's debtor-friendly institutional policy. Our paper extends the scope of innovation financing studies by demonstrating that firms behave strategically in the context of state policies, in this case by privileging patent quantity over quality.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
