Does Enforcement of Intellectual Property Rights Matter in China ...

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Appendix 3: Definition of the Variables Variable Description Source IPP1 The number of IP infringement cases won by the plaintiffs divided by the sum of cases won by plaintiffs and cases won by defendants. We identify that a case is won by plaintiff if the court orders the defendant to cease IP infringement, compensate the plaintiff for its loss due to the infringement, destruct the infringing products and equipments involved, and/or pay the legal cost of the lawsuit. The case is won by the defendant if the court dismisses the lawsuit of the plaintiff. IPP2 Number of articles advocating IP protection in the newspaper published by provincial Community Party, which is the highest organ of the provincial administration. This variable has province-year observations from 2001-2005 for 27 provinces which does not include Shandong province because of missing observations in the database. The newspaper published by provincial committee of CCP in each province are (name of province in parenthesis): Anhui Daily (Anhui); Beijing Daily (Beijing); Chongqing Daily (Chongqing); Fujian Daily (Fujian); Gansu Daily (Gansu); Nanfang Daily (Guangdong); Guangxi Daily (Guangxi); Guizhou Daily (Guizhou); Hainan Daily (Hainan); Hebei Daily (Hebei); Heilongjiang Daily (Heilongjiang); Henan Daily (Henan); Hubei Daily (Hubei); Hunan Daily (Hunan); Xinhua Daily (Jiangsu); Jiangxi Daily (Jiangxi); Jilin Daily (Jilin); Liaoning Daily (Liaoning); Neimenggu Daily (Neimenggu); Dazhong Daily (Shandong); Jiefan Daily (Shanghai); Shaanxi Daily (Shaanxi); Shanxi Daily (Shanxi); Sichuan Daily (Sichuan); Tianjin Daily (Tianjin); Xinjiang Daily (Xinjiang); Yunnan Daily (Yunnan); Zhejiang Daily (Zhejiang). 46 Judicial Case Database of Chinalawinfo Chinese Major Newspapers Fulltext Database Christian Colleges The provincial number of Christian colleges by 1920. Stauffer, Wong and Tewksbury (1922) British Settlement Dummy variable equals 1 when a province had a British concession or leased territory during the late Qing Dynasty, 0 otherwise. The concession or leased Yang & Ye (1993) territory of British were in Xiamen city in Fujian, Hankou city in Hubei, Jiujiang city in Jiangxi, Zhenjiang City in Jiangsu, Guangzhou City in Guangdong, Weihaiwei in Shandong, Tianjin, and Shanghai. New Product Sales Ratio University The number of universities in a province. NBS Metropolis Dummy variable equals 1 if the province has at least one city with over two million inhabitants. NBS Access to New Dummy variable equals 1 if there is a net increase of debt for firm i in year t MOST Debt that exceeds 5% of its total assets at the end of year t. Informal Financing It’s the net increase in informal financing (debt minus bank loan and trade MOST Ratio credit) for firm i in year t as a percentage of new debt of year t. We only construct this variable for firms who had access to new debt in 2004 and 2005, because the data of bank loan is only available in these two years. MOST dataset does not disclose trade credit, so we use instead, the industry median ratio of new trade credit to the net increase of all debt for the listed companies in the same industry-year, in the calculation of informal financing ratio. The classification of industry refers to Industry Classification Standard from the CSRC (China Securities Regulatory Commission). R&D Intensity Research and development expenditure of firm i in year t divided by start-of- MOST year of book asset. New product sales divided by total sales. 292 observations are coded as missing, because they have zero total sales at that observing point. GDP Growth Annual growth rate of provincial GDP using PPP. NBS Banking Development Corruption Control Provincial banking system development index is the arithmetic average of the standardized value of following two sub-indexes: first, the competition in the financial industry measured as the percentage of deposits taken by non-state financial institutions for each province; second, the transition to open markets in loan allocation measured as the percentage of short-term loans to the nonstate sector for each province. Standardized value is calculated according to following formula: Score = (V i -V min )/(V max -V min )×10 , where V i is the original score of index i in the period of 2001 to 2005; V max and V min are the maximum and minimum of the original score of all provinces in base year (2001). Provincial Corruption Control index is the arithmetic average of the standardized value of following two sub-indexes: first, intervention by the government in business operations, measured as the time spent by MOST Fan& Wang (2001, 2004,2007, 2010) Fan& Wang (2001, 2004, 2007, 2010)
entrepreneurs in dealing with bureaucracy; second, the ratio of non-tax levies on enterprises (including illegal fees, apportion and fine from local government) as a percentage of sales. A formula similar to that for the Banking Index is used to standardize the measure. Patent Dummy Dummy variable equals 1 if the companies hold any patents before the current year. Patent could be innovation patent, utility model patent or design patent. SIPO According to the companies’ name, we hand collect the data of this variable from SIPO patent search website. Sales Growth Total sales growth rate. The value of this variable, when sales in the previous year is zero and the ratio is unbounded, is set equal to the maximum value in MOST the sample. Intangible to Total Intangible asset divided by total assets. MOST Assets Ratio ROA Net profit divided by total assets. MOST Leverage Book debt divided by total assets. MOST New Debt/Assets Ratio of net increase of debt in a given year to total assets at the beginning of the year. MOST New External Ratio of net increase of external equity in a given year to total assets at the Equity /Assets beginning of the year. Net increase of external equity is defined as the change MOST in book equity minus the change in retained earnings. New Internal Denotes the ratio of net increase in retain earnings in a given year to total Financing /Assets assets at the beginning of the year. MOST Innovation patents The number of Innovation patents created by the company in a given year. We hand collect the data for this variable from SIPO patent search website. SIPO Log(R&D stock) R&D stock for firm i at the end of year t is calculated from the formula: k i,t = (1-δ) k i,t-1 +r i,t , where r i,t is the end-of-period stock of R&D capital and k i,t is MOST the R&D expenditure during the year t in thousand RMB. The depreciation rate δ is chosen to be 15%, Because our sample period is only five years, we choose to include only two lagged R&D expenditures. Log(Assets) Natural logarithm of total assets in thousand RMB. MOST Log(Firm Age) Natural logarithm of firm age MOST Industry Dummies 21 industry dummies have been included in all equations in Tables 2 to 8. The classification of industry is from the Industry Classification Standard of CSRC MOST (China Securities Regulatory Commission). There are 13 major categories of industry according to Industry Classification Standard of CSRC, and the manufacturing industry is further divided into 10 sub-categories. An industry dummy takes the value 1 if the firm’s main activity is in that industry, and zero otherwise. 47
Page 1 and 2: Does Enforcement of Intellectual Pr
Page 3 and 4: Does Enforcement of Intellectual Pr
Page 5 and 6: To test our hypotheses, we utilize
Page 7 and 8: and 2) British Settlement, a dummy
Page 9 and 10: These two factors suggest that it i
Page 11 and 12: when the roles of formal financing
Page 13 and 14: copyright infringement cases. We be
Page 15 and 16: oad region, there are substantial v
Page 17 and 18: to ensure that the analysis focuses
Page 19 and 20: To deal with outliers, we winsorize
Page 21 and 22: ights enforcement on financing, R&D
Page 23 and 24: the early years of the Republic. Th
Page 25 and 26: the exclusion restriction criterion
Page 27 and 28: variables, are lagged by one year.
Page 29 and 30: with the hypothesis that strong IP
Page 31 and 32: References Allen, F., Qian, J., Qia
Page 33 and 34: Political Economy 106, 1113-1155. L
Page 35 and 36: Licensing fees Paid by Chinese Comp
Page 37 and 38: Table 2: The effect of IP rights en
Page 41 and 42: Christian Colleges 0.019 0.118 (14.
Page 45: Appendix 2: List of International C

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