Medium-Term Effects of Quantitative and Qualitative Shocks in Trademark Activity on Firm Value: An Empirical Analysis Using Local Projections

This study investigates how firms' trademark portfolios influence corporate value over a medium-term horizon by examining the dynamic responses of Tobin's q to trademark related shocks. Using panel data on all publicly listed firms in Japan from 2009 to 2024, the analysis distinguishes between quantitative shocks—captured by changes in the number of trademarks owned by each firm—and qualitative shocks —defined by improvements in trademark quality indicators. The Local Projection Method is employed to estimate impulse response functions that trace the evolution of firm value over three years following each type of shock. The empirical results reveal that qualitative shocks consistently lead to positive, statistically significant increases in Tobin's q, suggesting that improvements in trademark quality meaningfully enhance firm value. In contrast, quantitative shocks exhibit weaker, largely insignificant effects, indicating that simply increasing the volume of trademark applications does not necessarily strengthen corporate value. Additional analyses reveal substantial heterogeneity across industry sectors, suggesting that the economic relevance of trademark activity varies with firms' competitive environments and strategic positioning. Overall, the findings underscore the importance of considering both the qualitative dimensions of trademark portfolios and firm-level heterogeneity when evaluating the role of intellectual property in shaping medium-term corporate performance.