IDEAS home Printed from https://ideas.repec.org/a/spr/scient/v89y2011i3d10.1007_s11192-011-0471-1.html
   My bibliography  Save this article

Re-examine the relationship between patents and Tobin’s q

Author

Listed:
  • Yu-Shan Chen

    (National Taipei University)

  • Chun-Yu Shih

    (National Yunlin University of Science & Technology)

Abstract

Since the relationship between patents and Tobin’s q is confusing, this paper utilizes panel threshold regression model to re-examine the relationship between patent counts/sales and Tobin’s q. This study finds out patent citations/sales has a single threshold effect on the relationship between patent counts/sales and Tobin’s q in the US pharmaceutical industry. The single threshold value of patent citations/sales is 328.81, and it divides the value of patent citations/sales into two regimes: the first regime (patent citations/sale ≦ 328.81) and the second regime (patent citations/sale > 328.81). The results indicate that patent counts/sales positively affect Tobin’s q in the two regimes. In addition, this study demonstrates that the extent of the positive effect of patent counts/sales on Tobin’s q is different. This study verifies that patent citations/sales moderates the relationship between patent counts/sales and Tobin’s q. Once patent citations/sales is below the threshold value, the extent of the positive relationship between patent counts/sales and Tobin’s q is the most. Therefore, this study finds out that the first regime is optimal.

Suggested Citation

  • Yu-Shan Chen & Chun-Yu Shih, 2011. "Re-examine the relationship between patents and Tobin’s q," Scientometrics, Springer;Akadémiai Kiadó, vol. 89(3), pages 781-794, December.
    • Handle: RePEc:spr:scient:v:89:y:2011:i:3:d:10.1007_s11192-011-0471-1
    DOI: 10.1007/s11192-011-0471-1
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11192-011-0471-1
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s11192-011-0471-1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lanjouw, Jean O & Schankerman, Mark, 2001. "Characteristics of Patent Litigation: A Window on Competition," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 129-151, Spring.
    2. Yu-Shan Chen, 2011. "Using patent analysis to explore corporate growth," Scientometrics, Springer;Akadémiai Kiadó, vol. 88(2), pages 433-448, August.
    3. Hirschey, Mark, 1982. "Intangible Capital Aspects of Advertising and R&D Expenditures," Journal of Industrial Economics, Wiley Blackwell, vol. 30(4), pages 375-390, June.
    4. Hansen, Bruce E, 1996. "Inference When a Nuisance Parameter Is Not Identified under the Null Hypothesis," Econometrica, Econometric Society, vol. 64(2), pages 413-430, March.
    5. Mansfield, Edwin & Schwartz, Mark & Wagner, Samuel, 1981. "Imitation Costs and Patents: An Empirical Study," Economic Journal, Royal Economic Society, vol. 91(364), pages 907-918, December.
    6. Hansen, Bruce E., 1999. "Threshold effects in non-dynamic panels: Estimation, testing, and inference," Journal of Econometrics, Elsevier, vol. 93(2), pages 345-368, December.
    7. Jensen, Elizabeth J, 1987. "Research Expenditures and the Discovery of New Drugs," Journal of Industrial Economics, Wiley Blackwell, vol. 36(1), pages 83-95, September.
    8. David J. TEECE, 2008. "Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy," World Scientific Book Chapters, in: The Transfer And Licensing Of Know-How And Intellectual Property Understanding the Multinational Enterprise in the Modern World, chapter 5, pages 67-87, World Scientific Publishing Co. Pte. Ltd..
    9. Yu-Shan Chen & Ke-Chiun Chang, 2009. "Using neural network to analyze the influence of the patent performance upon the market value of the US pharmaceutical companies," Scientometrics, Springer;Akadémiai Kiadó, vol. 80(3), pages 637-655, September.
    10. 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.
    11. Jaffe, Adam B, 1986. "Technological Opportunity and Spillovers of R&D: Evidence from Firms' Patents, Profits, and Market Value," American Economic Review, American Economic Association, vol. 76(5), pages 984-1001, December.
    12. Ernst, Holger, 2001. "Patent applications and subsequent changes of performance: evidence from time-series cross-section analyses on the firm level," Research Policy, Elsevier, vol. 30(1), pages 143-157, January.
    13. Schankerman, Mark & Pakes, Ariel, 1986. "Estimates of the Value of Patent Rights in European Countries during the Post-1950 Period," Economic Journal, Royal Economic Society, vol. 96(384), pages 1052-1076, December.
    14. Trajtenberg, Manuel, 2001. "Innovation in Israel 1968-1997: a comparative analysis using patent data," Research Policy, Elsevier, vol. 30(3), pages 363-389, March.
    15. Emmanuel Duguet & Megan MacGarvie, 2005. "How well do patent citations measure flows of technology? Evidence from French innovation surveys," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 14(5), pages 375-393.
    16. Bronwyn H. Hall & Adam Jaffe & Manuel Trajtenberg, 2005. "Market Value and Patent Citations," RAND Journal of Economics, The RAND Corporation, vol. 36(1), pages 16-38, Spring.
    17. Chih‐Hai Yang & Jong‐Rong Chen, 2003. "Innovation and Market Value in Newly‐Industrialized Countries: The Case of Taiwanese Electronics Firms," Asian Economic Journal, East Asian Economic Association, vol. 17(2), pages 205-220, June.
    18. 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.
    19. Derek Bosworth & Mark Rogers, 2001. "Market Value, R&D and Intellectual Property: An Empirical Analysis of Large Australian Firms," The Economic Record, The Economic Society of Australia, vol. 77(239), pages 323-337, December.
    20. Otto Toivanen & Paul Stoneman & Derek Bosworth, 2002. "Innovation and the Market Value of UK Firms, 1989–1995," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 64(1), pages 39-61, February.
    21. Dietmar Harhoff & Francis Narin & F. M. Scherer & Katrin Vopel, 1999. "Citation Frequency And The Value Of Patented Inventions," The Review of Economics and Statistics, MIT Press, vol. 81(3), pages 511-515, August.
    22. Ernst, Holger, 2003. "Patent information for strategic technology management," World Patent Information, Elsevier, vol. 25(3), pages 233-242, September.
    23. Hirschey, Mark & Richardson, Vernon J., 2004. "Are scientific indicators of patent quality useful to investors?," Journal of Empirical Finance, Elsevier, vol. 11(1), pages 91-107, January.
    24. repec:bla:ecorec:v:77:y:2001:i:239:p:323-37 is not listed on IDEAS
    25. Dasgupta, Partha, 1988. "Patents, Priority and Imitation or, the Economics of Races and Waiting Games," Economic Journal, Royal Economic Society, vol. 98(389), pages 66-80, March.
    26. Hagedoorn, John & Cloodt, Myriam, 2003. "Measuring innovative performance: is there an advantage in using multiple indicators?," Research Policy, Elsevier, vol. 32(8), pages 1365-1379, September.
    27. Yong-Gil Lee & Jeong-Dong Lee & Yong-Il Song & Se-Jun Lee, 2007. "An in-depth empirical analysis of patent citation counts using zero-inflated count data model: The case of KIST," Scientometrics, Springer;Akadémiai Kiadó, vol. 70(1), pages 27-39, January.
    28. Edwin Mansfield, 1986. "Patents and Innovation: An Empirical Study," Management Science, INFORMS, vol. 32(2), pages 173-181, February.
    29. Richard Blundell & Rachel Griffith & John van Reenen, 1999. "Market Share, Market Value and Innovation in a Panel of British Manufacturing Firms," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(3), pages 529-554.
    30. Hirschey, Mark & Richardson, Vernon J., 2001. "Valuation effects of patent quality: A comparison for Japanese and U.S. firms," Pacific-Basin Finance Journal, Elsevier, vol. 9(1), pages 65-82, January.
    31. Nicholas Bloom & John Van Reenen, 2002. "Patents, Real Options and Firm Performance," Economic Journal, Royal Economic Society, vol. 112(478), pages 97-116, March.
    32. Jean O. Lanjouw & Mark Schankerman, 2004. "Patent Quality and Research Productivity: Measuring Innovation with Multiple Indicators," Economic Journal, Royal Economic Society, vol. 114(495), pages 441-465, April.
    33. Lindenberg, Eric B & Ross, Stephen A, 1981. "Tobin's q Ratio and Industrial Organization," The Journal of Business, University of Chicago Press, vol. 54(1), pages 1-32, January.
    34. Gilbert, Richard J & Newbery, David M G, 1982. "Preemptive Patenting and the Persistence of Monopoly," American Economic Review, American Economic Association, vol. 72(3), pages 514-526, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bessen, James & Neuhäusler, Peter & Turner, John L. & Williams, Jonathan, 2018. "Trends in private patent costs and rents for publicly-traded United States firms," International Review of Law and Economics, Elsevier, vol. 56(C), pages 53-69.
    2. Jiang, Cuiqing & Zhou, Yiru & Chen, Bo, 2023. "Mining semantic features in patent text for financial distress prediction," Technological Forecasting and Social Change, Elsevier, vol. 190(C).
    3. Kathryn Rudie Harrigan & Maria Chiara Guardo & Elona Marku, 2018. "Patent value and the Tobin’s q ratio in media services," The Journal of Technology Transfer, Springer, vol. 43(1), pages 1-19, February.
    4. Yu-Shan Chen & Chun-Yu Shih & Ching-Hsun Chang, 2014. "Explore the new relationship between patents and market value: a panel smooth transition regression (PSTR) approach," Scientometrics, Springer;Akadémiai Kiadó, vol. 98(2), pages 1145-1159, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yu-Shan Chen & Chun-Yu Shih & Ching-Hsun Chang, 2014. "Explore the new relationship between patents and market value: a panel smooth transition regression (PSTR) approach," Scientometrics, Springer;Akadémiai Kiadó, vol. 98(2), pages 1145-1159, February.
    2. Yu-Shan Chen & Ke-Chiun Chang, 2009. "Using neural network to analyze the influence of the patent performance upon the market value of the US pharmaceutical companies," Scientometrics, Springer;Akadémiai Kiadó, vol. 80(3), pages 637-655, September.
    3. Yu-Shan Chen & Chun-Yu Shih & Ching-Hsun Chang, 2013. "Patents and market value in the U.S. pharmaceutical industry: new evidence from panel threshold regression," Scientometrics, Springer;Akadémiai Kiadó, vol. 97(2), pages 161-176, November.
    4. Federico Munari & Raffaele Oriani (ed.), 2011. "The Economic Valuation of Patents," Books, Edward Elgar Publishing, number 13561.
    5. Serena Morricone & Raffaele Oriani, 2011. "Stock Market Valuation of Patent Portfolios," Chapters, in: Federico Munari & Raffaele Oriani (ed.), The Economic Valuation of Patents, chapter 13, Edward Elgar Publishing.
    6. Nicolas van Zeebroeck, 2011. "The puzzle of patent value indicators," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 20(1), pages 33-62.
    7. Maria Chiara Di Guardo & Kathryn Rudie Harrigan & Elona Marku, 2019. "M&A and diversification strategies: what effect on quality of inventive activity?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 23(3), pages 669-692, September.
    8. Nicolas van Zeebroeck, 2007. "Patents only live twice: a patent survival analysis in Europe," Working Papers CEB 07-028.RS, ULB -- Universite Libre de Bruxelles.
    9. Kyriakos Drivas & Claire Economidou & Elena Ketteni & Konstantina Kottaridi, 2021. "Firms’ knowledge investment and market responses," Empirical Economics, Springer, vol. 61(5), pages 2363-2394, November.
    10. Nagaoka, Sadao & Motohashi, Kazuyuki & Goto, Akira, 2010. "Patent Statistics as an Innovation Indicator," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 1083-1127, Elsevier.
    11. Dirk Czarnitzki & Katrin Hussinger & Bart Leten, 2020. "How Valuable are Patent Blocking Strategies?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 56(3), pages 409-434, May.
    12. 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.
    13. Burak Dindaroglu, 2010. "Intra-Industry Knowledge Spillovers and Scientific Labor Mobility," Discussion Papers 10-01, University at Albany, SUNY, Department of Economics.
    14. Bronwyn H. Hall & Grid Thoma & Salvatore Torrisi, 2006. "The market value of patents and R&D: Evidence from European firms," KITeS Working Papers 186, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Nov 2006.
    15. Sandner, Philipp G. & Block, Joern, 2011. "The market value of R&D, patents, and trademarks," Research Policy, Elsevier, vol. 40(7), pages 969-985, September.
    16. Chang, Ke-Chiun & Chen, Dar-Zen & Huang, Mu-Hsuan, 2012. "The relationships between the patent performance and corporation performance," Journal of Informetrics, Elsevier, vol. 6(1), pages 131-139.
    17. Yu-Shan Chen, 2011. "Using patent analysis to explore corporate growth," Scientometrics, Springer;Akadémiai Kiadó, vol. 88(2), pages 433-448, August.
    18. Nils Omland, 2011. "Valuing Patents through Indicators," Chapters, in: Federico Munari & Raffaele Oriani (ed.), The Economic Valuation of Patents, chapter 7, Edward Elgar Publishing.
    19. Manuel Acosta & Daniel Coronado & Esther Ferrándiz & Manuel Jiménez, 2022. "Effects of knowledge spillovers between competitors on patent quality: what patent citations reveal about a global duopoly," The Journal of Technology Transfer, Springer, vol. 47(5), pages 1451-1487, October.
    20. Hall, Bronwyn H. & Oriani, R, 2006. "Does the market value R&D investment by European firms? Evidence from a panel of manufacturing firms in France, Germany, and Italy," Department of Economics, Working Paper Series qt8wc513c1, Department of Economics, Institute for Business and Economic Research, UC Berkeley.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:scient:v:89:y:2011:i:3:d:10.1007_s11192-011-0471-1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.