Who do you trust while Shares are on a Roler-Coaster Ride? Balance Sheet and Patent Data as Sources of Investor Information During Volatile Market Times
AbstractWe originally investigate the comparative usefulness of patent data as a source of investor information depending on the market cycle (bull/bear market). Based on comprehensive data for firms listed on German exchanges between 1997 and 2002, we demonstrate that patent data contain complementary explanatory power to accounting data irrespective of the standard used to prepare the financial statement (German GAAP, IAS and US GAAP). Moreover, we provide original evidence that only patent data are able to provide plausible investor information in both bull-market and bear-market periods, whereas accounting information overvalues intangible assets in bull markets and undervalues them in bears.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies in its series DRUID Working Papers with number 05-15.
Date of creation: 2005
Date of revision:
Contact details of provider:
Web page: http://www.druid.dk/
Investor information; market value; patents;
Find related papers by JEL classification:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
- M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting
- K11 - Law and Economics - - Basic Areas of Law - - - Property Law
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-10-15 (All new papers)
- NEP-CFN-2005-10-15 (Corporate Finance)
- NEP-FIN-2005-10-15 (Finance)
- NEP-FMK-2005-10-15 (Financial Markets)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Cockburn, Iain & Griliches, Zvi, 1988.
"Industry Effects and Appropriability Measures in the Stock Market's Valuation of R&D and Patents,"
American Economic Review,
American Economic Association, vol. 78(2), pages 419-23, May.
- Iain Cockburn & Zvi Griliches, 1987. "Industry Effects and Appropriability Measures in the Stock Markets Valuation of R&D and Patents," NBER Working Papers 2465, National Bureau of Economic Research, Inc.
- Louis K. C. Chan, 2001. "The Stock Market Valuation of Research and Development Expenditures," Journal of Finance, American Finance Association, vol. 56(6), pages 2431-2456, December.
- Guellec, Dominique & Pottelsberghe de la Potterie, Bruno v., 2000.
"Applications, grants and the value of patent,"
Elsevier, vol. 69(1), pages 109-114, October.
- Zvi Griliches, 1984.
"Market Value, R&D, and Patents,"
in: R & D, Patents, and Productivity, pages 249-252
National Bureau of Economic Research, Inc.
- Franklin Allen & Douglas Gale, 2001. "Comparing Financial Systems," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262511258.
- Rajan, Raghuram G & Zingales, Luigi, 1998.
"Financial Dependence and Growth,"
American Economic Review,
American Economic Association, vol. 88(3), pages 559-86, June.
- Raghuram G. Rajan & Luigi Zingales, 1996. "Financial Dependence and Growth," NBER Working Papers 5758, National Bureau of Economic Research, Inc.
- Raghuram G. Rajan & Luigi Zingales, . "Financial Dependence and Growth," CRSP working papers 344, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
- Suzanne Scotchmer, 1991. "Standing on the Shoulders of Giants: Cumulative Research and the Patent Law," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 29-41, Winter.
- Bosworth, Derek & Rogers, Mark, 2001. "Market Value, R&D and Intellectual Property: An Empirical Analysis of Large Australian Firms," The Economic Record, The Economic Society of Australia, vol. 77(239), pages 323-37, December.
- Heckman, James J, 1979.
"Sample Selection Bias as a Specification Error,"
Econometric Society, vol. 47(1), pages 153-61, January.
- Eric Nowak, 2001. "Recent Developments In German Capital Markets And Corporate Governance," Journal of Applied Corporate Finance, Morgan Stanley, vol. 14(3), pages 35-48.
- Goyal, Vidhan K. & Gollapudi, Neela & Ogden, Joseph P., 1998. "A corporate bond innovation of the 90s: The clawback provision in high-yield debt," Journal of Corporate Finance, Elsevier, vol. 4(4), pages 301-320, December.
- Connolly, Robert A. & Hirschey, Mark, 1988. "Market value and patents : A Bayesian approach," Economics Letters, Elsevier, vol. 27(1), pages 83-87.
- Markus Reitzig, 2004. "The private values of 'thickets' and 'fences': towards an updated picture of the use of patents across industries," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 13(5), pages 457-476.
- Fields, Thomas D. & Lys, Thomas Z. & Vincent, Linda, 2001. "Empirical research on accounting choice," Journal of Accounting and Economics, Elsevier, vol. 31(1-3), pages 255-307, September.
- Harhoff, Dietmar & Reitzig, Markus, 2004.
"Determinants of opposition against EPO patent grants--the case of biotechnology and pharmaceuticals,"
International Journal of Industrial Organization,
Elsevier, vol. 22(4), pages 443-480, April.
- Harhoff, Dietmar & Reitzig, Markus, 2002. "Determinants of Opposition Against EPO Patent Grants - The Case of Biotechnology and Pharmaceuticals," CEPR Discussion Papers 3645, C.E.P.R. Discussion Papers.
- Ariel Pakes, 1986.
"Patents as Options: Some Estimates of the Value of Holding European Patent Stocks,"
NBER Working Papers
1340, National Bureau of Economic Research, Inc.
- Pakes, Ariel S, 1986. "Patents as Options: Some Estimates of the Value of Holding European Patent Stocks," Econometrica, Econometric Society, vol. 54(4), pages 755-84, July.
- Schill, Michael J., 2004. "Sailing in rough water: market volatility and corporate finance," Journal of Corporate Finance, Elsevier, vol. 10(5), pages 659-681, November.
- Harhoff, Dietmar & Scherer, Frederic M. & Vopel, Katrin, 2003. "Citations, family size, opposition and the value of patent rights," Research Policy, Elsevier, vol. 32(8), pages 1343-1363, September.
- Christian Leuz, 2003. "IAS Versus U.S. GAAP: Information Asymmetry-Based Evidence from Germany's New Market," Journal of Accounting Research, Wiley Blackwell, vol. 41(3), pages 445-472, 06.
- Bange, Mary M. & De Bondt, Werner F. M., 1998. "R&D budgets and corporate earnings targets," Journal of Corporate Finance, Elsevier, vol. 4(2), pages 153-184, June.
- Connolly, Robert A & Hirsch, Barry T & Hirschey, Mark, 1986. "Union Rent Seeking, Intangible Capital, and Market Value of the Firm," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 567-77, November.
- Stephen R. Bond & Jason G. Cummins, 2000. "The Stock Market and Investment in the New Economy: Some Tangible Facts and Intangible Fictions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(1), pages 61-124.
- William C. Brainard & James Tobin, 1968. "Pitfalls in Financial Model-Building," Cowles Foundation Discussion Papers 244, Cowles Foundation for Research in Economics, Yale University.
- Nicholas Bloom & John Van Reenen, 2000. "Patents, productivity and market value: evidence from a panel of UK firms," IFS Working Papers W00/21, Institute for Fiscal Studies.
- Jean O. Lanjouw & Mark Schankerman, 2004. "Patent Quality and Research Productivity: Measuring Innovation with Multiple Indicators," Economic Journal, Royal Economic Society, vol. 114(495), pages 441-465, 04.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Keld Laursen).
If references are entirely missing, you can add them using this form.