Work

Patented innovation and left‐tail risk: Evidence from China

Year: 2024

Type: article

Abstract: This study investigates the impact of patented innovation on the left‐tail risk of stock price, measured as the 1% value at risk (VaR) and expected shortfall (ES). Using the sample of all listed firms in the Chinese A‐share market from 2007 to 2020, we find that the quantity and quality of patents significantly decrease left‐tail risk. Second, the effect is more pronounced for firms in regions with patent pledge systems or stronger intellectual property rights protection. Short‐selling constraints and the engagement of retail investors hinder patented innovation from reducing left‐tail risk. Third, we further explore the mechanisms and find that patented innovation enhances financial performance, mitigates financial constraints, and attracts long‐term institutional investors, thereby decreasing left‐tail risk.

Source: International Journal of Finance & Economics

DOI: 10.1002/ijfe.3032

Authors: Shaoqing Jia, Liuyong Yang, Fangzhao Zhou, Jiayao Li, Yawei Qi

Institutions: Zhejiang University, Jiangnan University, China Jiliang University, Jiangxi University of Finance and Economics

Language: English

Topic: Intellectual Property and Patents

Subfield: Management of Technology and Innovation

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Industry, innovation and infrastructure

Open Access status: green

Funders: National Natural Science Foundation of China, China Scholarship Council