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Innovation and Entrepreneurship Research

Leveraging Intellectual Property: The Value of Harmonized Enforcement Regimes

Gill, Andrej; Heller, David (2022). Leveraging Intellectual Property: The Value of Harmonized Enforcement Regimes.

We provide new evidence on how intellectual property (IP) rights support external debt financing by investigating exogenous variation in patent right enforcement. Deploying a unique, large-scale sample of European firms, we exploit the 2004 EU Enforcement Directive, a major legislative change strengthening IP rights across Europe, as identifying event. Results show that firms with valuable patent portfolios disproportionally increase debt financing by about 21%. Effects are particularly pronounced for private SMEs, ex-ante financially constrained firms, and in competitive environments. Adding previously undisclosed patent collateral information provides suggestive evidence that enhanced IP enforcement benefits debt financing beyond a mere collateral channel.

Available at SSRN

Earlier version published under the title: Leverage Intellectual Property: The Value of Harmonized Enforcement Regimes - 2019