Research Interests

Corporate innovation, mergers and acquisitions, q theory of investment, behavioral finance


Working Papers

Patent Thickets and Mergers and Acquisitions (with Logan Emery)

We examine the relation between patent thickets and acquisitions. Patent thickets are dense webs of overlapping intellectual property rights that create costs by complicating licensing negotiations and increasing the risk of holdup and litigation. We find that firms are less likely to be acquired when they are in a denser thicket comprised of many patent owners, which exposes firms to these costs. In contrast, firms are more likely to be acquired when the thicket created by their own patents is denser, which insulates firms from these costs. We also find that when a firm occupies the same thicket as the acquirer, it is more likely to be acquired when it can impose these costs on the acquirer but less likely to be acquired when it can have these costs imposed on it by the acquirer. Importantly, our results are not explained by patent count, patent citations, or technological overlap. Overall, we show that patent thickets play an important role when acquiring innovation.

Price-Path Convexity and Short-Horizon Return Predictability (with Huseyin Gulen)

We find that the curvature of intramonth stock price paths contains significant return predictive power. Regardless of cumulative return in the month during which convexity is estimated, stocks with the least convex price paths subsequently outperform stocks with the most convex price paths. Our results are not driven by firm size, the bid-ask bounce, or other short-term return predictors. We find similar results in alternative samples and even at the aggregate market level. We provide evidence that this relation is driven by both liquidity shocks and behavioral biases at the firm level and by behavioral biases at the aggregate level.

Work in Progress

Appraisal-Constrained Asset Prices (with Jordan Martel and Edward Van Wesep)

We present a stylized model of asset pricing in which lenders value collateral using an appraisal, which is defined as the average selling price of similar assets in recent transactions. When valuations change, appraisals lag fair values and cause delayed price adjustment. This delay generates momentum, sellers' markets, asset flipping, and associations between price appreciation, volume, and liquidity. Our results suggest many avenues for fruitful empirical research on asset prices in appraisal-constrained markets.