Purpose This paper aims to explore the relationship between patents (with quantity and quality) and the corporate finance policies in Vietnam, including investment, leverage, and dividend payout. In addition, this study also hinges on the 2013 Science and Technology Law to examine the causal effect of this regulation on two groups (innovative and non-innovative firms) before and after the policy shock. Design/methodology/approach We construct a unique dataset linking patents to firm-level financial information from Orbis Intellectual Property and firm datasets, from 2003 to 2022. Using an event study approach by Freyaldenhoven et al. (2025), we analyze the impact of the 2013 Science and Technology Law, comparing innovative firms (those with patents) and non-innovative firms. We also employ a two-way fixed effects model to examine the relationship between innovation and corporate policies, while controlling for firm-specific characteristics, and test for unobservable variables by Oster (2019). Findings Our findings suggest that patenting activities significantly influence firms' investment in fixed assets, with innovative firms holding a higher ratio of fixed assets over total assets. However, we find no precisely estimated coefficients for patents on profitability or dividend payout. Additionally, after the 2013 Science and Technology Law, innovative firms increase fixed assets and their performance, as well as reduce leverage compared to non-innovative firms. Originality/value Although the literature focuses on the developed economies, this study shows the relationship between patents and corporate policy choices. Furthermore, using the policy shock to claim a causal relationship, this study emphasizes the role of science and technology law in financial decision-making through the innovation process.
Dang et al. (Mon,) studied this question.