The Disclosure Function of the U.S. Patent System : Evidence from the PTDL Program and Extreme Snowfall

Can firms use the U.S. patent system to communicate with the financial market? This study uses variation in local patent information availability to identify local changes in trading volume in reaction to the release of a patent. The variation comes from changes in the geographic location of U.S. Patent and Trademark Depository Libraries over time. I find a strong increase in the local trading volume of stocks after the release of a patent in counties that have access to patent information. The effect is stronger for high value information and for investors that are closer to the information. Finally, the association breaks down on days with extreme snowfall, indicating a direct patent information transfer between the U.S. Patent and Trademark Office and the financial market