TY - JOUR
T1 - The Effect of Intellectual Property Rights Protection on Stock Price Informativeness
AU - Hou, Fangfang
AU - Ng, Jeffrey
AU - Ranasinghe, Tharindra
AU - Zhang, Janus Jian
N1 - Hou acknowledges financial support from the National Natural Science Foundation of China (Grant No. 72302198). All the authors would like to acknowledge financial support from their respective institutions.
Publisher copyright:
© The Author(s), 2025. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington
PY - 2025/10/16
Y1 - 2025/10/16
N2 - We examine whether intellectual property protection facilitates the greater incorporation of firm-specific information into the stock price. Employing the staggered, country-level adoption of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), we find that after adoption, stock prices become less synchronous, consistent with more firm-specific information being impounded into the stock price. We further show that this effect is more pronounced for more innovative firms, firms in countries with stronger law enforcement, and firms with more financial analyst coverage. Finally, we document that TRIPS induces a richer information environment characterized by more management forecasts and media coverage.
AB - We examine whether intellectual property protection facilitates the greater incorporation of firm-specific information into the stock price. Employing the staggered, country-level adoption of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), we find that after adoption, stock prices become less synchronous, consistent with more firm-specific information being impounded into the stock price. We further show that this effect is more pronounced for more innovative firms, firms in countries with stronger law enforcement, and firms with more financial analyst coverage. Finally, we document that TRIPS induces a richer information environment characterized by more management forecasts and media coverage.
UR - http://www.scopus.com/inward/record.url?scp=105019259898&partnerID=8YFLogxK
U2 - 10.1017/S0022109025102305
DO - 10.1017/S0022109025102305
M3 - Journal article
SN - 0022-1090
SP - 1
EP - 57
JO - Journal of Financial and Quantitative Analysis
JF - Journal of Financial and Quantitative Analysis
ER -
