We examine the spillover effects of public firm disclosures on patent licensing, a key mechanism for technology diffusion. An interquartile increase in public firm presence, our proxy for peer disclosures, is linked to a 20.7% higher likelihood of a firm obtaining a license. For licensed patents, contracts become more lenient as public disclosures increase: licensors are more likely to forgo unilateral termination rights, grant exclusivity, and charge lower royalties. We find support for a causal narrative using Bartik instruments and the EDGAR implementation as settings. The documented link is stronger when the economic environment is more volatile, information asymmetry is higher, and disclosures are more innovation relevant. That is, licensors are more likely to have lenient licensing terms when public disclosures have a more pronounced role in resolving information frictions. Conditional on licensing, we find a significant increase in licensees’ innovative activity that directly builds on the licensed patent, consistent with patent licensing stimulating the diffusion of technology and ideas across firms.
