Essays on corporate policies and lobbying

Abstract

This thesis is composed of three essays that examine corporate policies and lobbying behavior. In the first chapter, State Level Anti-Patent Trolling Laws and Cash Holding, I investigate the impact of state level anti-patent trolling laws in the US on firms’ cash and debt policies. I claim that anti-patent trolling laws affect corporate policies through two opposing channels: decreasing probability of being a potential target and decreasing uncertainty. I observe that anti-patent trolling laws led to an increase in cash holdings and a decrease in leverage. In line with the targeting strategy of PAEs, I show that the increase in cash holdings and decrease in leverage are mainly driven by innovative firms. I also investigate the interplay between financial constraints and state laws. Results also suggest that the effects on cash and debt are more pronounced for financially constrained firms. Finally, I observe a positive correlation between firms’ investment in intangible capital and the introduction of state laws. The second chapter, Patent Ownership, Trade and Lobbying, examines the participation of firms in lobbying on intellectual property rights when they are exposed to trade shocks. Utilizing the data of publicly listed firms and firm level federal lobbying reports in the US, I show that patent-owner firms dominate trade lobbying. Then, I establish a causal link between import penetration from China and lobbying on intellectual property rights using the identification strategy of Autor et al. (2013). As a response to the import penetration from China, I observe that firms increase their lobbying on intellectual property both at the extensive and intensive margin. Results also suggest heterogeneous impact on lobbying. Considering existing results on this subject, this paper provides a striking conclusion: Firms facing competition from China prefer lobbying to investing in innovation. In the third chapter, Technological Innovation, Digital Adoption and Firm Performance, written jointly with Economists from the European Investment Bank, we investigate the impact of digital technology adoption on various firm outcomes. Utilizing the Investment Survey of the European Investment Bank (EIBIS), we first show that the large and productive firms adopt digital technologies. Then, we develop instruments that combine input-output linkages between country-industry groups and sector-specific digital patent stocks to examine the impact of adopting digital technologies on firms’ outcome. Results suggest that the digital technology adoption leads to a substantial increase in productivity and wages. Additionally, digital technology adoption positively affects firms’ training decisions and management practices as well as their investment in innovation.