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Court Decisions and Equity Markets: Estimating the Value of Copyright Protection

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  • Matthew J. Baker

    ()
    (United States Naval Academy)

  • Brendan M. Cunningham

    ()
    (United States Naval Academy)

Abstract

We use a novel database on U. S. federal court decisions to measure the changes in the state of copyright protection in both statute and case law. We combine an index of copyright breadth derived from this database with a quarterly panel of firms in creative industries over the years 1986-1998. Using this data, we measure the impact of changes in the breadth of copyright on the market valuation of firm equity. We maintain the assumption that equity markets will incorporate the value of copyright innovations into the price of equity. After controlling for a variety of fundamental determinants of ¯rm-level excess returns to equity, we find that a court case broadening copyright is associated with a statistically significant 23-45 basis points increase in a firm's excess return. Our results obtain across both 4-5 year sub-samples and the size distribution of firms.

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Bibliographic Info

Paper provided by United States Naval Academy Department of Economics in its series Departmental Working Papers with number 4.

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Length: 31 pages
Date of creation: Mar 2004
Date of revision:
Handle: RePEc:usn:usnawp:4

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  1. Novos, Ian E & Waldman, Michael, 1984. "The Effects of Increased Copyright Protection: An Analytic Approach," Journal of Political Economy, University of Chicago Press, vol. 92(2), pages 236-46, April.
  2. Thomas J. Miceli & Richard P. Adelstein, 2005. "An Economic Model of Fair Use," Working papers 2005-56, University of Connecticut, Department of Economics.
  3. Kranenburg,Hans,van & Hogenbrink,Annelies, 2003. "Determinants of Multimedia, Entertainment, and Business Software Copyright Piracy: A Cross-national Study," Research Memorandum 039, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  4. Johnson, William R, 1985. "The Economics of Copying," Journal of Political Economy, University of Chicago Press, vol. 93(1), pages 158-74, February.
  5. Eric Chiang & Djeto Assane, 2002. "Software copyright infringement among college students," Applied Economics, Taylor & Francis Journals, vol. 34(2), pages 157-166.
  6. B. Zorina Khan & Kenneth L. Sokoloff, 2001. "The Early Development of Intellectual Property Institutions in the United States," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 233-246, Summer.
  7. Landes, William M & Posner, Richard A, 1989. "An Economic Analysis of Copyright Law," The Journal of Legal Studies, University of Chicago Press, vol. 18(2), pages 325-63, June.
  8. Louis K.C. Chan & Josef Lakonishok & Theodore Sougiannis, 1999. "The Stock Market Valuation of Research and Development Expenditures," NBER Working Papers 7223, National Bureau of Economic Research, Inc.
  9. Rick Harbaugh & Rahul Khemka, . "Does Copyright Enforcement Encourage Piracy?," Claremont Colleges Working Papers 2000-14, Claremont Colleges.
  10. Towse, Ruth, 1999. "Copyright and Economic Incentives: An Application to Performers' Rights in the Music Industry," Kyklos, Wiley Blackwell, vol. 52(3), pages 369-90.
  11. Stan J. Liebowitz & Stephen E. Margolis, 2005. "Seventeen Famous Economists Weigh In On Copyright: The Role Of Theory, Empirics, And Network Effects," Law and Economics 0505003, EconWPA.
  12. Kai-Lung Hui, 2002. "On the Supply of Creative Work: Evidence from the Movies," American Economic Review, American Economic Association, vol. 92(2), pages 217-220, May.
  13. Stanley M. Besen & Leo J. Raskind, 1991. "An Introduction to the Law and Economics of Intellectual Property," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 3-27, Winter.
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Cited by:
  1. Jen-Te Yao, 2005. "How a Luxury Monopolist Might Benefit from a Stringent Counterfeit Monitoring Regime," International Journal of Business and Economics, College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 4(3), pages 177-192, December.
  2. Christine Greenhalgh & Mark Rogers, 2007. "The Value of Intellectual Property Rights to Firms," Discussion Papers 06-036, Stanford Institute for Economic Policy Research.
  3. Ivan Png, 2006. "Copyright: A Plea for Empirical Research," Levine's Working Paper Archive 321307000000000484, David K. Levine.
  4. Bronwyn Hall & Christian Helmers & Mark Rogers & Vania Sena, 2014. "The Choice between Formal and Informal Intellectual Property: A Review," Journal of Economic Literature, American Economic Association, vol. 52(2), pages 375-423, June.
  5. Felix Oberholzer-Gee & Koleman Strumpf, 2010. "File Sharing and Copyright," NBER Chapters, in: Innovation Policy and the Economy, Volume 10, pages 19-55 National Bureau of Economic Research, Inc.
  6. Stan J. Liebowitz & Richard Watt, 2006. "How To Best Ensure Remuneration For Creators In The Market For Music? Copyright And Its Alternatives," Journal of Economic Surveys, Wiley Blackwell, vol. 20(4), pages 513-545, 09.
  7. Ivan Png & Qiu-hong Wang, 2007. "Copyright Duration and the Supply of Creative Work," Levine's Working Paper Archive 321307000000000478, David K. Levine.

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