Firms rely on patenting and trade secrecy to protect their intellectual property. We study how changes in the trade-off between patenting and secrecy affect firms’ stock liquidity and financing outcomes. We show that an international trade agreement (TRIPS) that strengthened patent protection led to a 10.2% increase in patenting, accompanied by a 14.0%–27.1% improvement in stock liquidity for firms in patent-reliant industries. This in turn allows the affected firms to increase equity financing by 1.9% and reduce leverage by 5.9%. Our results suggest that policies that promote use of patenting over secrecy can reduce informational frictions in equity markets.

中文翻译：

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知识产权保护与金融市场：专利与保密

公司依靠专利和贸易保密来保护自己的知识产权。我们研究专利权和保密权之间的权衡变化如何影响公司的股票流动性和融资成果。我们发现，加强专利保护的国际贸易协定（TRIPS）导致专利申请量增加了10.2％，同时，专利依赖行业的公司的股票流动性提高了14.0％–27.1％。反过来，这可使受影响的公司将股权融资增加1.9％，并将杠杆率降低5.9％。我们的结果表明，通过保密来促进专利使用的政策可以减少股票市场中的信息摩擦。