ABSTRACT
Using a comprehensive database of infringement cases involving patents, trademarks, and trade secrets, we show that firms’ frequency and likelihood of being sued for infringement increase with short-term institutional ownership. We use both a quasi-natural experiment of mergers between financial institutions and instrumental variable regressions based on fund flows to support a causal effect of shareholders’ short-termism on infringement. The likelihood of injunctions granted by courts and the chance of being entangled in prolonged lawsuits also increase with short-term institutional ownership. Our results suggest that these investors urge managers to aggressively pursue new product areas, which likely leads to legal disputes.
Hsu, Po-Hsuan and Shen, Carl Hsin-han and Wang, Yanzhi, Investor Short-termism and Intellectual Property Infringement (November 15, 2023).
Leave a Reply