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Innovation and Market Value

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  • Bronwyn Hall

Abstract

This paper surveys recent findings about how the financial markets value the knowledge assets of publicly traded firms. The motivation for using market value equation to price knowledge assets is discussed and the theory behind this equation is briefly presented. Then the empirical literature that relates Tobins q to R&D and patent measures is surveyed and new results based on U.S. data through 1995 are presented. The conclusion is that the market value of the modern manufacturing corporation is strongly related to its knowledge assets, and that patent measures contain information about this value above and beyond that conveyed by the usual R&D measure.

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File URL: http://www.nuff.ox.ac.uk/economics/papers/1999/w3/niesr98.pdf
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Bibliographic Info

Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 1999-W03.

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Date of creation: 01 Jan 1998
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Handle: RePEc:oxf:wpaper:1999-w03

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  1. Fumio Hayashi & Tohru Inoue, 1990. "The Relation Between Firm Growth and Q with Multiple Capital Goods: Theory and Evidence from Panel Data on Japanese Firms," NBER Working Papers 3326, National Bureau of Economic Research, Inc.
  2. Hall, Bronwyn H. & Hayashi, Fumio, 1989. "Research and Development as an Investment," Department of Economics, Working Paper Series, Department of Economics, Institute for Business and Economic Research, UC Berkeley qt8br8d266, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  3. Dietmar Harhoff & Francis Narin & Frederic M. Scherer & Katrin Vopel, 1997. "Citation Frequency and the Value of Patented Innovation," CIG Working Papers, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) FS IV 97-26, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  4. Sundaram, Anant K. & John, Teresa A. & John, Kose, 1996. "An empirical analysis of strategic competition and firm values The case of R&D competition," Journal of Financial Economics, Elsevier, Elsevier, vol. 40(3), pages 459-486, March.
  5. Connolly, Robert A. & Hirschey, Mark, 1988. "Market value and patents : A Bayesian approach," Economics Letters, Elsevier, Elsevier, vol. 27(1), pages 83-87.
  6. Megna, Pamela & Klock, Mark, 1993. "The Impact on Intangible Capital on Tobin's q in the Semiconductor Industry," American Economic Review, American Economic Association, American Economic Association, vol. 83(2), pages 265-69, May.
  7. Jensen, Michael C, 1993. " The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems," Journal of Finance, American Finance Association, American Finance Association, vol. 48(3), pages 831-80, July.
  8. Bronwyn H. Hall, 1999. "Innovation and Market Value," NBER Working Papers 6984, National Bureau of Economic Research, Inc.
  9. Lev, Baruch & Sougiannis, Theodore, 1996. "The capitalization, amortization, and value-relevance of R&D," Journal of Accounting and Economics, Elsevier, Elsevier, vol. 21(1), pages 107-138, February.
  10. Pakes, Ariel, 1985. "On Patents, R&D, and the Stock Market Rate of Return," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 93(2), pages 390-409, April.
  11. 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.
  12. Zvi Griliches & Bronwyn H. Hall & Ariel Pakes, 1988. "R&D, Patents, and Market Value Revisited: Is There Evidence of A SecondTechnological Opportunity Related Factor?," NBER Working Papers 2624, National Bureau of Economic Research, Inc.
  13. Manuel Trajtenberg, 1990. "A Penny for Your Quotes: Patent Citations and the Value of Innovations," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 172-187, Spring.
  14. Trajtenberg, Manuel, 1989. "The Welfare Analysis of Product Innovations, with an Application to Computed Tomography Scanners," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 97(2), pages 444-79, April.
  15. Adam B. Jaffe, 1986. "Technological Opportunity and Spillovers of R&D: Evidence from Firms' Patents, Profits and Market Value," NBER Working Papers 1815, National Bureau of Economic Research, Inc.
  16. White, Fred C., 1995. "Valuation Of Intangible Capital In Agriculture," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, Southern Agricultural Economics Association, vol. 27(02), December.
  17. Zvi Griliches, 1984. "Market Value, R&D, and Patents," NBER Chapters, in: R & D, Patents, and Productivity, pages 249-252 National Bureau of Economic Research, Inc.
  18. Blundell, Richard & Griffith, Rachel & van Reenen, John, 1999. "Market Share, Market Value and Innovation in a Panel of British Manufacturing Firms," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 66(3), pages 529-54, July.
  19. Hirschey, Mark, 1985. "Market Structure and Market Value," The Journal of Business, University of Chicago Press, University of Chicago Press, vol. 58(1), pages 89-98, January.
  20. 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.
  21. Bronwyn H. Hall & Robert E. Hall, 1993. "The Value and Performance of U.S. Corporations," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 24(1), pages 1-50.
  22. Austin, David H, 1993. "An Event-Study Approach to Measuring Innovative Output: The Case of Biotechnology," American Economic Review, American Economic Association, American Economic Association, vol. 83(2), pages 253-58, May.
  23. Thompson, Peter, 1996. "Technological Opportunity and the Growth of Knowledge: A Schumpeterian Approach to Measurement," Journal of Evolutionary Economics, Springer, Springer, vol. 6(1), pages 77-97, February.
  24. Fisher, Franklin M & McGowan, John J, 1983. "On the Misuse of Accounting Rates of Return to Infer Monopoly Profits," American Economic Review, American Economic Association, American Economic Association, vol. 73(1), pages 82-97, March.
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