When Failure Goes Public: Evidence From the American Inventor Protection Act 

Job Market Paper

This paper examines whether government disclosure of failed patent applications influences firms’ patenting decisions. Leveraging a provision of the American Inventors Protection Act (AIPA) that mandates such disclosure, I find that fewer patents are granted in patent classes with higher failure rates. Among U.S. public firms, those more exposed to high-failure-rate classes experience a significant decline in the number of patents granted following the regulatory change. However, there is no corresponding drop in innovation activity, suggesting that disclosure discourages patenting but not innovation. Affected firms increasingly emphasize proprietary information in their 10-K filings, indicating a shift toward keeping innovation confidential. The decline is more pronounced in patent classes characterized by intense competition and more breakthrough innovations, consistent with heightened proprietary cost concerns. Collectively, these findings highlight that the disclosure of failed patent applications can discourage firms from seeking patent protection.

Regulating via Social Media: Deterrence Effects of  the SEC's use of Twitter

co-authors: Raphael Duguay, Jinjie Lin , Jake Thomas

Revising for third-round submission to Journal of Accounting and Economics

We evaluate the effect of financial regulators’ social media use on misconduct by regulated entities. We study whether misconduct by firms and investment advisors declines around the staggered launch of Twitter accounts by regional offices of the U.S. Securities and Exchange Commission (SEC). Even though the tweets repackage information available on the SEC’s website, we find a reduction in opportunistic insider trading and financial misreporting for firms, and a reduction in customer complaints against investment advisers. Consistent with the tweets making enforcement actions more salient and widely disseminated, this deterrence effect is concentrated among (i) regional SEC offices with more Twitter followers and (ii) investment advisers with more retail clients. In addition, we find Twitter adoption expands press coverage of the SEC’s work and the stock market reacts more strongly to SEC enforcement actions. Taken together, our results suggest that financial regulators’ use of social media, a relatively low-cost intervention, helps deter misconduct.