Abstract
Patent thickets, a phenomenon of fragmented ownership of overlapping patent rights, hamper firms’ commercialization of patents and thus deliver asset pricing implications. We show that firms with deeper patent thickets are involved in more patent litigations, launch fewer new products, and become less profitable in the future. These firms are also associated with lower subsequent stock returns, which can be explained by a conditional Capital Asset Pricing Model (CAPM) based on a general equilibrium model that features heterogeneous market betas conditional on time-varying aggregate productivity. This explanation is supported by further evidence from factor regressions and stochastic discount factor tests.This paper was accepted by Karl Diether, finance.Funding: This work was supported by the National Natural Science Foundation of China [Grant 72003206], the E.SUNAcademic Award, fromtheMinistry of Education in Taiwan [MOE110J0321Q2], and the Ministry of Science and Technology in Taiwan [MOST109-2628-E-004-001-MY3 and MOST109-2628-H-007-001-MY4].Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2021.4229 .
Sign-in/Register to access full text options 
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.
