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Innovation and firm value: An investigation of the changing role of patents, 1985–2007

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  • Belenzon, Sharon
  • Patacconi, Andrea

Abstract

This paper examines how the relationship between firm value and patent-based indicators of inventive activity has changed over time. We use data from more than 33,000 mergers and acquisitions deals between 1985 and 2007, and distinguish between American (USPTO) and European (EPO) patents. Our results indicate that over time EPO patents have become the dominant indicator of innovative activity, while USPTO patents have no effect on firm value near the end of the sample period. The results are robust to controlling for citations and are especially strong for small firms, for firms operating in the drug and chemical industries, and when target and acquiring firms operate in different industries or countries.

Suggested Citation

  • Belenzon, Sharon & Patacconi, Andrea, 2013. "Innovation and firm value: An investigation of the changing role of patents, 1985–2007," Research Policy, Elsevier, vol. 42(8), pages 1496-1510.
    • Handle: RePEc:eee:respol:v:42:y:2013:i:8:p:1496-1510
    DOI: 10.1016/j.respol.2013.05.001
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    Keywords

    Firm value; Patent portfolio valuation; Patent policy;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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