Wendi Du

Assistant Professor in Finance

Darla Moore School of Business

University of South Carolina

Research Interest: FinTech, Innovation, AI in Natural Language Processing (NLP), Responsible and Sustainable Finance

Working Papers

Firms increasingly rely on external sources of innovation -- such as technology licensing, purchases of intangible assets, and business acquisitions -- to augment their internal R&D. We study whether external innovation complements or substitutes internal R&D using the 2022 enforcement of Section 174 of the Tax Cuts and Jobs Act as an exogenous shock that raised the after-tax cost of internal R&D. Using a difference-in-differences design, we show that more R&D-intensive firms significantly increased externally sourced innovation -- measured comprehensively using acquired intangible assets -- without reducing internal R&D. These firms subsequently achieved higher innovative efficiency and originality, explored new technological domains, were more likely to generate breakthrough patents, and became more profitable.

Trademarks, the legal protection of brands, are increasingly pledged as collateral in practice. This paper investigates the redeployability channel of trademarks' collateral value. Using a novel court decision that exogenously weakens trademark redeployability, I find that affected firms significantly reduce leverage. Additionally, affected firms are less likely to pledge their registered trademarks as collateral afterward. When they do pledge, they pledge a greater number of trademarks, as well as more valuable ones. In sum, my results highlight the value of trademark collateral in enhancing firms' debt capacity through its redeployability channel.
Presented at FMA 2024, Georgia Institute of Technology, University of South Carolina, Babson College, Virginia Tech, University of Alberta, UC Riverside

When FLUE Meets FLANG: Benchmarks and Large Pre-trained Language Model for Financial Domain (with Raj Sanjay Shah, Kunal Chawla, Dheeraj Eidnani, Agam Shah, Sudheer Chava, Natraj Raman, Smiley Charese, Jiaao Chen, Diyi Yang)