How U.S. Laws Protecting America's Best Ideas Are Killing Innovation

Lauren  Cohen; Umit G. Gurun; Scott Duke Kominers

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Blog Post | Fortune.com, Postcards Blog

How U.S. Laws Protecting America's Best Ideas Are Killing Innovation

by Lauren Cohen, Umit G. Gurun and Scott Duke Kominers

Format: Electronic

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Citation:

Cohen, Lauren, Umit G. Gurun, and Scott Duke Kominers. "How U.S. Laws Protecting America's Best Ideas Are Killing Innovation." Fortune.com, Postcards Blog (January 22, 2015). http://fortune.com/2015/01/22/how-u-s-laws-protecting-americas-best-ideas-are-killing-innovation/.

About the Authors

Lauren H. Cohen

L.E. Simmons Professor of Business Administration

Finance

Entrepreneurial Management

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Scott Duke Kominers

MBA Class of 1960 Associate Professor of Business Administration

Entrepreneurial Management

View Profile »
View Publications »

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Kominers, Scott Duke. "Making Auctions Work in Practice Is Worth a Nobel." Bloomberg Opinion (October 12, 2020). View Details

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Genomics in the Family Office

Lauren Cohen, Ronnie Stangler and Spencer C. N. Hagist

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Cohen, Lauren, Ronnie Stangler, and Spencer C. N. Hagist. "Genomics in the Family Office." Harvard Business School Case 221-035, October 2020. View Details

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Article | Journal of Financial Economics | October 2020

IQ from IP: Simplifying Search in Portfolio Choice

Huaizhi Chen, Lauren Cohen, Umit Gurun, Dong Lou and Christopher J. Malloy

Using a novel database that tracks web traffic on the SEC’s EDGAR servers between 2004 and 2015, we show that mutual fund managers gather information on a very particular subset of firms and insiders, and their surveillance is very persistent over time. This tracking behavior has powerful implications for their portfolio choice and its information content. An institution that downloaded an insider-trading filing by a given firm last quarter increases its likelihood of downloading an insider-trading filing on the same firm by more than 41.3% this quarter. Moreover, the average tracked stock that an institution buys generates annualized alphas of between 9% to 18% relative to the purchase of an average non-tracked stock. We find that institutional managers tend to track members of the top management teams of firms (CEOs, CFOs, presidents, and board chairs) and tend to share educational and location-based commonalities with the specific insiders they choose to follow. Collectively, our results suggest that the information in tracked trades is important for fundamental firm value and is only revealed following the information-rich dual trading by insiders and linked institutions.

Keywords: tracked trades; Return Predictability; institutional trading; insider trading; Institutional Investing; Information; Investment Portfolio; Decisions; Management;

Citation:
Chen, Huaizhi, Lauren Cohen, Umit Gurun, Dong Lou, and Christopher J. Malloy. "IQ from IP: Simplifying Search in Portfolio Choice." Journal of Financial Economics 138, no. 1 (October 2020): 118–137. (Winner of the First Prize, Crowell Memorial Award for Best Paper in Quantitative Investments, PanAgora Asset Management, 2019.) View Details

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How U.S. Laws Protecting America's Best Ideas Are Killing Innovation

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