Donald E. Bowen III

Virginia Polytechnic Institute & State University - Pamplin College of Business

Ph.D. in Finance, University of Maryland

Email: donbowen (at) vt (dot) edu

Vita (PDF)

SSRN page

NEW: The latest draft of "Were non-independent boards really captured before SOX?" was covered by Columbia Law School's corporate governance blog

Research Interests

Empirical Corporate Finance: Investment, Innovation, Entrepreneurship, Firm Boundaries, Corporate Governance

Working Papers

"Patent acquisition, investment, and contracting" (SSRN link)
2016 Best Paper in Innovation and Entrepreneurship, Ed Snider Center for Entrepreneurship and Markets, University of Maryland
Numerous works have examined the finance-related implications of intellectual property that is generated internally or acquired through M&A activity. The transfer of intellectual property via the secondary market for patents has received less attention. This paper fills that gap by asking how patent acquisitions interact with firm investment policy. I find that patent acquirers subsequently invest in more R&D, increase internal patenting, and eventually make new investments in CAPX. Firms with more technological expertise and investment opportunities acquire more patents. Patent sales are the dominant type of contract and maximize investment incentives; patent licenses frequently contain royalties, which induce underinvestment problems. Nevertheless, licensing can be explained in part by financial and strategic considerations. Licensing is more likely when buyers become financially constrained, when revenue can be shifted to low tax sellers, and when the buyer is a competitor acquiring rights to a valuable patent. Overall, these results suggest patent acquisitions are motivated by the pursuit of investment synergies, rather than innovation substitution, commercialization motives, or legal threats.
  • Seminar presentations: University of Houston, Southern Methodist, University of Oklahoma, University of Florida, Tulane, University of Maryland, University of Southern California, 2017 Finance, Organizations and Markets (FOM) Conference (Scheduled)
  • Best Paper in Innovation and Entrepreneurship from the Ed Snider Center for Entrepreneurship and Markets, 2017

"Were non-independent boards really captured before SOX?" (SSRN link)
Following SOX, exchanges mandated majority independent boards and defined independence such that some directors could reclassify from non-independent to independent. Because membership is unchanged, reclassifications make a board more independent legally, but not economically. I exploit the plausibly exogenous nature of reclassification eligibility to compare "treatment" firms that altered board membership to similar "placebo" firms that reclassified directors instead.  Consistent with the view that boards are chosen optimally, placebo firms outperformed treatment firms by 3.7%. Furthermore, the mandate, which reduced firm specific knowledge as inside directors departed, also impacted investment choices: Treatment firms subsequently shifted away from intangible investments.
  • Media mentions: Columbia Law School's Blue Sky Blog
  • Seminar presentations: University of Rochester, University of Maryland, 2017 Paris Financial Management Conference (Scheduled)


"What's your identification strategy? Innovation in corporate finance research" (SSRN link) (Official link) (Data)
with Laurent Fresard and Jerome Taillard
Management Science (Forthcoming)
Identification techniques entered finance in the 1990s (20 years after economics) and adoption was accelerated by training, colleagues, and researchers moving from economics to finance. Consistent with recent theories of technology diffusion, the adoption varies across researchers based on individuals’ expected net benefits of adoption.