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

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  • Baker, Matthew J
  • Cunningham, Brendan M

Abstract

We construct a database of U.S. federal court decisions pertaining to copyright and changes in federal statutory copyright law and use this database to assemble indices measuring changes in the breadth of copyright protection. We combine our indices with information on excess returns to equity from a quarterly panel of firms and estimate how the breadth of copyright affects the market valuation of firm equity. A typical statute that increases copyright breadth generates an increase in a firm's excess return to equity of 40-209 basis points, depending on the exact time frame, the size of the firm, and the importance of the change in statutory law. A typical high-court decision expanding copyright generates a 13-105 basis-point increase in excess returns. Our results are robust across 4-5-year subsamples and the size distribution of firms. Our statutory findings are strongest in the most recent portion of the sample.

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File URL: http://dx.doi.org/10.1086/505372
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Article provided by University of Chicago Press in its journal Journal of Law and Economics.

Volume (Year): 49 (2006)
Issue (Month): 2 (October)
Pages: 567-96

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Handle: RePEc:ucp:jlawec:y:2006:v:49:i:2:p:567-96
Contact details of provider: Web page: http://www.journals.uchicago.edu/JLE/

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  1. 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.
  2. 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).
  3. 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.
  4. Thomas J. Miceli & Richard P. Adelstein, 2003. "An Economic Model of Fair Use," Working papers 2003-38, University of Connecticut, Department of Economics.
  5. 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.
  6. 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.
  7. Kai-Lung Hui & Ivan P.L. Png, 2002. "On the Supply of Creative Work: Evidence from the Movies," Law and Economics 0201002, EconWPA, revised 18 Jan 2002.
  8. Rick Harbaugh & Rahul Khemka, . "Does Copyright Enforcement Encourage Piracy?," Claremont Colleges Working Papers 2000-14, Claremont Colleges.
  9. Johnson, William R, 1985. "The Economics of Copying," Journal of Political Economy, University of Chicago Press, vol. 93(1), pages 158-74, February.
  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.
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  13. Eric Chiang & Djeto Assane, 2002. "Software copyright infringement among college students," Applied Economics, Taylor & Francis Journals, vol. 34(2), pages 157-166.
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Cited by:

  1. Christine Greenhalgh & Mark Rogers, 2007. "The Value of Intellectual Property Rights to Firms," Discussion Papers 06-036, Stanford Institute for Economic Policy Research.
  2. Ivan Png & Qiu-hong Wang, 2007. "Copyright Duration and the Supply of Creative Work," Levine's Working Paper Archive 321307000000000478, David K. Levine.
  3. 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.
  4. Ivan Png, 2006. "Copyright: A Plea for Empirical Research," Levine's Working Paper Archive 321307000000000484, David K. Levine.
  5. 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.
  6. Stoneman, Paul, 2011. "Soft Innovation: Economics, Product Aesthetics, and the Creative Industries," OUP Catalogue, Oxford University Press, number 9780199697021, December.
  7. 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.
  8. 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.

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