"Practice and Talk":Patent Disclosure and Market's Recognition of M&A Value
In recent years,there has been a continuous effort by the government to emphasize the importance of firms'innovation ca-pabilities in capital markets.Invention patents held by firms serve as crucial sources of information for the capital market to assess their innovation capabilities.The decision of firms regarding patent disclosure determines the timeliness of the market's knowledge about their patent information.However,patent disclosure comes with significant costs for companies.Therefore,investigating what value can be brought to firms by disclosing more sufficient patent information to the market is crucial to the firms'patent disclosure decision.This study approaches the issue from the perspective of helping the capital market recognize the value of mergers and acquisitions(M&A)deals.The findings reveal that the patent disclosure of acquiring firms in M&A transactions significantly enhances the market's ability to identify the value of their M&A deals.The mech-anism analyses suggest that the patent disclosure of the acquiring firm serves as a crucial information channel for the market to assess its innovation capabilities.The market adjusts its perception of the acquiring firm's innovation capabilities and subsequently adjusts its expectation regarding the M&A deal's value attributable to ac-quiring firm's innovation capabilities.Furthermore,this study finds that patent disclosure also contributes to the actual performance of acquiring firms in the long-term.Overall,this study enhances our understanding of the value of pat-ent disclosure from its impact on the efficiency of capital market's price discovery,particularly in the context of M&A transactions.It highlights the potential benefits that can be derived from more com-prehensive patent disclosure to the market.The research contributes to the literature of patent disclosure and the value of M&A.Mean-while,it provides insights for firms'patent disclosure decisions and also provides support for the government's efforts to further encour-age firms'patent disclosure and improve market resource allocation efficiency.
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