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Publications
Publications
  • 2017
  • Working Paper
  • HBS Working Paper Series

The Use and Misuse of Patent Data: Issues for Corporate Finance and Beyond

By: Josh Lerner and Amit Seru
  • Format:Print
  • | Language:English
  • | Pages:129
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Abstract

Patents and citations are powerful tools for understanding innovative activity inside the firm and are increasingly used in corporate finance research. But due to the complexities of patent data collection and the changing spatial and industry composition of innovative firms, biases may be introduced. We highlight several patent-level biases induced by truncation of reported patent awards and citations, affecting estimates of time trends and patterns across technology classes and regions. We then introduce measures of patent and citation biases. When aggregated at the firm level, these survive popular methods of adjustment and are correlated with firm-level characteristics. We show that these issues can lead to problematic—and ex ante predictable—inferences, using several examples from prominent streams of finance literature that use patent data. We suggest a number of concrete steps that researchers can employ to avoid biased inferences.

Keywords

Patents; Data And Data Sets; Corporate Finance; Research; Problems And Challenges

Citation

Lerner, Josh, and Amit Seru. "The Use and Misuse of Patent Data: Issues for Corporate Finance and Beyond." Harvard Business School Working Paper, No. 18-042, November 2017.
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About The Author

Josh Lerner

Entrepreneurial Management
→More Publications

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    • 2021
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    Two Case Studies on the Financing of Forest Conservation

    By: Andrew Baxter, Connor Cash, Josh Lerner and Ratnika Prasad
More from the Authors
  • Fencing Off Silicon Valley: Cross-Border Venture Capital and Technology Spillovers By: Ufuk Akcigit, Sina T. Ates, Josh Lerner, Richard Townsend and Yulia Zhestkova
  • Venture Capital's Role in Financing Innovation: What We Know and How Much We Still Need to Learn By: Josh Lerner and Ramana Nanda
  • Two Case Studies on the Financing of Forest Conservation By: Andrew Baxter, Connor Cash, Josh Lerner and Ratnika Prasad
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