Patents and the financial performance of firms - An analysis based on stock market data
AbstractThe following article systematically analyzes the question of how the results of R&D and its protection - or so to say, the technology base of a firm - can influence its market value and profits. Based on theoretical arguments it is hypothesized that large and highly valuable patent portfolios of firms have significant effects on their competitiveness in the long run. For the empirical testing a panel dataset including 479 firms from 1990 to 2007 based on the DTI-Scoreboard is used, which contains data on R&D expenditures, market capitalization, turnover etc. and structural information like firm-size and industry sector. To this database the relevant information on patenting behavior and financial performance are added, so effects of firm characteristics can be calculated. To assess the value of a firm's patent portfolio, different value measures like the number of received patent citations, opposed patents, number of inventors etc. are being applied. The results suggest that at least at the firm level, especially forward citations and family size positively influence market value. Concerning the Return on Investment, especially oppositions and family size show positive effects. This leads to the conclusion that securing international markets has a positive effect on the value of the firm in the home market. --
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Bibliographic InfoPaper provided by Fraunhofer Institute for Systems and Innovation Research (ISI) in its series Discussion Papers "Innovation Systems and Policy Analysis" with number 28.
Date of creation: 2011
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-04-30 (All new papers)
- NEP-CSE-2011-04-30 (Economics of Strategic Management)
- NEP-FMK-2011-04-30 (Financial Markets)
- NEP-INO-2011-04-30 (Innovation)
- NEP-IPR-2011-04-30 (Intellectual Property Rights)
- NEP-SBM-2011-04-30 (Small Business Management)
- NEP-TID-2011-04-30 (Technology & Industrial Dynamics)
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- de Rassenfosse, Gaétan, 2013.
"Do firms face a trade-off between the quantity and the quality of their inventions?,"
Elsevier, vol. 42(5), pages 1072-1079.
- Gaétan de Rassenfosse, 2013. "Do Firms Face a Trade-Off between the Quantity and the Quality of Their Inventions?," Melbourne Institute Working Paper Series wp2013n06, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
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