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Truncation bias corrections in patent data: Implications for recent research on innovation

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  • Dass, Nishant
  • Nanda, Vikram
  • Xiao, Steven Chong

Abstract

We review the effectiveness of various adjustment methods in correcting the truncation-bias in patents data and the implications for existing studies. The NBER patents-database was recently updated, extending the sample from 2006 to 2010. The updated sample is largely free of truncation-bias over the period covered by the NBER-2006 sample, allowing us to evaluate the bias-adjustment methods. We find that existing adjustments perform poorly towards the end of NBER-2006 sample. We re-examine multiple studies from the recent literature on innovation and show that findings based on the last few years of NBER-2006 data are not supported in the updated patents-database.

Suggested Citation

  • Dass, Nishant & Nanda, Vikram & Xiao, Steven Chong, 2017. "Truncation bias corrections in patent data: Implications for recent research on innovation," Journal of Corporate Finance, Elsevier, vol. 44(C), pages 353-374.
    • Handle: RePEc:eee:corfin:v:44:y:2017:i:c:p:353-374
    DOI: 10.1016/j.jcorpfin.2017.03.010
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    References listed on IDEAS

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    More about this item

    Keywords

    Innovation; Patents; NBER patent data; Truncation bias; Stock liquidity;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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