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Analysis of the relationship between technological diversification and enterprise value using patent data

Author

Listed:
  • Yusuke Matsumoto

    (Keio University)

  • Aiko Suge

    (Keio University)

  • Hiroshi Takahashi

    (Keio University)

Abstract

As natural language processing technology advances, its application to finance is growing. We focus on technological diversification resulting from R&D activities, one of the concerns for firms requiring efficient business management. We analyze the relationship between technological diversification and enterprise value using text information of patents and examine text information's usefulness in corporate finance. Specifically, we created a firm's technological diversification index from the text information in the patents and the firm's excess value from its financial data and analyzed the relationship between them. We analyzed Japanese firms that have been listed on the First Section of the Tokyo Stock Exchange and have applied for patents during the period 2002–2015. As a result, we found that (1) the spread of technology in multiple ways could impair enterprise value, and (2) the use of text information can be more valuable than the use of specific standards indexes such as the International Patent Classification (IPC). This study shows interesting results on the relationship between technological diversification and enterprise value and implies the applicability of unstructured data to finance research. A detailed analysis is for further study.

Suggested Citation

  • Yusuke Matsumoto & Aiko Suge & Hiroshi Takahashi, 2025. "Analysis of the relationship between technological diversification and enterprise value using patent data," Information Technology and Management, Springer, vol. 26(2), pages 247-270, June.
    • Handle: RePEc:spr:infotm:v:26:y:2025:i:2:d:10.1007_s10799-023-00411-0
    DOI: 10.1007/s10799-023-00411-0
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    Keywords

    Corporate finance; Diversification; Excess value; Patent; Natural language processing;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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