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korean management review - Vol. 50 , No. 6
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korean management review - Vol. 50, No. 6, pp. 1495-1534
Abbreviation: kmr
ISSN: 1226-1874 (Print)
Print publication date 31 Dec 2021
Received 02 Jun 2021 Revised 12 Jul 2021 Accepted 26 Jul 2021
DOI: https://doi.org/10.17287/kmr.2021.50.6.1495

Patent Applications and Corporate Bond Ratings
Sejin Jung ; Jeongdae Yim
(First Author) Department of Business Administration, Daegu Catholic University (mule53@cu.ac.kr)
(Corresponding Author) BK21 FOUR, College of Business Administration, Chonnam National University (jdyim@chonnam.ac.kr)

특허출원이 회사채 신용등급에 미치는 영향

Copyright 2011 THE KOREAN ACADEMIC SOCIETY OF BUSINESS ADMINISTRATION
This is an open access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted, distribution, and reproduction in any medium, provided the original work is properly cited.
Abstract

In this study, we investigate the effects of patent applications on corporate bond ratings of Korean listed firms. Using an ordered probit regression, we show that firms with higher patent counts and greater patents to R&D investments are likely to have significantly higher bond ratings. This finding remains robust while considering the differences of firms with patenting versus without patenting, and adopting alternative variables measured by industry-adjusted numbers of patent applications. We further explore two possible channels through which patent applications affect corporate bond ratings. First, patent applications provide expectations for increased cash flows with debt market. Second, patent applications enable improved redeployability of assets held by firms. Through a series of analyses, this study sheds lights on the real effects of patenting activities on the debt market via firms’ bond ratings.

Keywords: Patent application, corporate bond ratings, cash flow, asset redeployability
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∙ The author Sejin Jung is an adjunct professor of Business Administration at Daegu Catholic University. She is a seasoned veteran in Finance industry having worked for Citigroup capital, South Korea for a decade. She subsequently switched her career to academia by obtaining Ph.D. in Business Administration from Kyungpook National University in South Korea. Her main research areas are credit ratings, corporate innovation, and cash holdings.

∙ The author Jeongdae Yim is a research professor of College of Business Administration at Chonnam National University. He earned a bachelor’s degree, a master’s degree, and Ph.D. in Business Administration from Kyungpook National University. His research interests lie in corporate innovation, innovation policy, and environmental management.

 
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