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

  • Baker, Matthew J
  • Cunningham, Brendan M

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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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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  8. 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.
  9. Thomas J. Miceli & Richard P. Adelstein, 2003. "An Economic Model of Fair Use," Working papers 2003-38, University of Connecticut, Department of Economics.
  10. Stanley M. Besen & Leo J. Raskind, 1991. "An Introduction to the Law and Economics of Intellectual Property," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 3-27, Winter.
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