Essays in intellectual properties and finance

Abstract

The first chapter of my thesis employs the USPTO trademark data to construct a measure of product market similarity and examine how it relates to stock return comovement. I find that both excess and idiosyncratic return comovement is positively associated with product market similarity. More importantly, my measure clearly outperforms alternative product market similarity proxies such as SIC code and Hoberg and Philips’s 10-K based measure in explaining both cross-sectional and within-group variation of stock return comovement. Furthermore, I find that the measure’s explanatory power in return comovement arises from its capability to capture variation in firm’s fundamental correlations. The second chapter uses a unique trademark-merger data set over the period 1983-2016 to shed light on the sources of synergies in mergers and acquisitions (M&As). I show that post-merger, compared to their non-acquiring peers, acquirers reduce new product offerings as measured by fewer new trademark registrations, especially in classes common to both acquirers and targets. Moreover, acquirers discontinue more acquirers’ and targets’ trademarks in common classes and classes unique to themselves, whereas discontinue fewer trademarks in classes unique to target firms. I conclude that M&As provide an opportunity for acquirers to gain access to different products and to reduce overlapping product offerings.