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- Title
Patent Trolls and the Market for Acquisitions.
- Authors
Dayani, Arash
- Abstract
I study the effect of patent-infringement claims by patent trolls on acquisitions of small firms. Exploiting staggered adoption of state anti-patent troll laws, I find that the laws have two effects. First, the number of acquisitions of small firms declines after these laws are adopted. Second, the anti-troll laws increase the acquisition price for acquirers. The market reflects the increased cost of acquisition as measured by lower acquisition announcement returns. Large firms increase R&D after the adoption of state laws, replacing external innovation. Using a sample of acquisitions that are plausibly unaffected by the laws, I disentangle alternative explanations.
- Subjects
NONPRACTICING entities (Patent law); MERGERS &; acquisitions; SMALL business; PATENT suits; STATE laws; RESEARCH &; development; PATENT law; PATENT infringement
- Publication
Journal of Financial & Quantitative Analysis, 2023, Vol 58, Issue 7, p2928
- ISSN
0022-1090
- Publication type
Article
- DOI
10.1017/S0022109023000078