Keywords

proprietary costs

Abstract

We study whether the sealing of a defendant’s judicial records during a patent lawsuit filing correlates with the defendant’s level of competition and disclosure. Courts permit sealing of judicial records when competitive damage outweighs the public interest in access to documents and records. We find that defendants with sealed judicial records have higher research and development (R&D), lower industry sales concentration, and more references to competition in their annual reports than defendants without sealed judicial records. We observe faster mean reversion of return on net operating assets when courts seal defendant records. The results suggest that sealing relates to archival measures of competition. Finally, consistent with proprietary costs restraining disclosure, we find that defendants with sealed judicial records are less likely to issue management forecasts, file 8-Ks less frequently, and have longer and less readable 10-Ks.

Original Publication Citation

Frankel, R., J. Lee, and Z. Lemayian. 2018. "Proprietary Costs and Sealing Documents in Patent Litigation," Review of Accounting Studies 23 (2), 452-486.

Document Type

Peer-Reviewed Article

Publication Date

2018

Publisher

Review of Accounting Studies

Language

English

College

Marriott School of Business

Department

Accountancy

University Standing at Time of Publication

Full Professor

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