Download or read book Intangible Assets, Firm Dynamics and Macroeconomic Aggregates written by Mark Rempel and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: How do frictions associated with idea-based, 'intangible' capital shape firm dynamics, innovative activity and the distribution of their rewards? I isolate and study three particular distinctive features of intangible assets across three corresponding chapters of my dissertation. The first chapter focuses on the resulting strategic interactions and externalities between firms associated with innovative capital, the second chapter examines the amplification of persistent information frictions within firms between investors and management, while the third chapter hones in on the increased transferability of productivity between firms in the merger and acquisition (M&A) market. Chapter 1: I study the role of asymmetric intellectual property protection (IPP) investments, such as patent portfolios and legal teams, in shaping innovation and entry barriers. I develop a framework where IP protection activities which endogenously creates large, innovative `superstar' firms, helping to rationalize: (i) a substantially thicker right tail in the sales distribution; (ii) increased average levels and dispersion of valuation ratios (market to book); (iii) within firm associations of market power and R&D investments, and (iv) low startup entry rates. I structurally estimate the model on a US firm-matched patent portfolio and IP litigation event dataset. Although improving the precision and strength of IP enforcement may maximize economic growth, the deadweight losses from patent-protected monopolies are estimated to be large. In fact, weakening of patent protections increases consumer welfare by more moderately increasing economic growth while significantly reducing monopoly pricing distortions. Chapter 2: How much does firm intangibility amplify CEOs' persistent private information and reduce firms' public listing propensity? Francesco Celentano and I develop a model of competing public and private investors financing firms heterogeneously exposed to persistent private cashflows. Equilibrium financing is driven by information rent differentials in CEO compensation. We validate and structurally estimate the model using firm listing and CEO compensation data. We find private (intangible) cashflows exhibit 63% higher persistence than their tangible counterparts. Further, if firm intangibility levels returned to those of 1980, mean listing propensities would increase 5 percentage points while mean CEO variable pay growth would decrease by 62%. Chapter 3: Cash utilization in US merger and acquisition (M&A) transactions has increased over 50% since the early 1990s amidst a secular, global M&A boom. I pose a theory of R&D-intensive firm cash demand in general equilibrium driven by competitive pressures in the M&A market and a speed of execution advantage of cash over stock. Real-financial linkages are demonstrated, whereby low nominal interest rates and cash-fueled M&A can alter firm concentration and economic growth. A calibration to the US economy suggests that excessive antitrust enforcement may be detrimental for innovation-based growth when M&A is spurred by transferable productivity amongst R&D-intensive firms.