Patents' Influence On Company Performances After IPO

Technology innovations have become the core power of economic growth in modern society.For this reason,our government always tried its best to improve technology innovations and perfect the patent system.Companies also increase their investment on research and development.As so,patents in our country increase quickly.By the end of 2016,the annual invention patent applications and total valid invention patents have both exceed 1 million.But there are always some people doubt the quality of patents,and this article want to discover patents' influence on companies by researching their influence on performances of the companies after IPO.This article uses companies on China's Growth Enterprises Market with IPO date from June 2010 to June 2015 as samples,and selects granted invention patents and utility models applied by company itself or its holding subsidiaries 5 years before IPO as company's patent indicator.Then this article uses regression model to research patents' influence on companies' operating and stock performances after IPO.The results shows that,when talking about operating performances,invention patents can't improve growth of operating revenue significantly but they can improve ROE 1 year or 2 years after IPO;when talking about stock performances,companies with high invention patents will get both higher buy-and-holding excess return and higher excess ? calculated using Fama-French three factors model in the year after IPO.But invention patents' influence on 2-year stock performances after IPO becomes much smaller and insignificant.Maybe it is because the value of invention patents' information becomes lower as companies continue to disclose their information after IPO and investors become much more familiar with the companies including their technology innovation abilities and results.While utility models have little influence on all 1-year or 2-year performance indicators.