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Trade Marks and Market Value in UK Firms

Author

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  • Christine Greenhalgh

    (Oxford Intellectual Property Research Centre, St Peter's College, Oxford University)

  • Mark Rogers

    (Harris Manchester College, Oxford University)

Abstract

This paper uses a new data set of the trade mark activity of UK manufacturing and service sector firms (1996-2000) to investigate the market value of trade marks. Data on both trade (and service) marks sought via the UK Patent Office (UKTM) and the European Community Office for Harmonisation of the Internal Market (CTM) are available. Firms use trade marks to signal to consumers that the product is of a certain origin, implying consistent quality and reducing consumer search costs, thus increasing customer loyalty. The value of trade marks may vary across firms and industries, depending on such factors as whether or not patents can be filed and the market structure. Equally the costs of trade marks vary between UKTM and CTM applications, being higher for the latter. We analyse Tobin's q, the ratio of stock market value to the book value of tangible assets. We explore the impact of undertaking any trade mark activity and also the effects of increasing trade mark intensity among those who do. The results indicate that stock market values are positively associated with R&D and trade mark activity by firms. We find larger differences between firms with and without trade marks for services than for manufacturing. We also find bigger differences in Tobin's q when the services firm is applying for Community marks, rather than just applying for UK marks. Increasing the intensity of trade marks matters for both manufacturing and services, although at a decreasing marginal rate for manufacturing and only for the years excluding 2000 for services. The rapid fall in the UK stock market in 2000 appeared to negate the benefits of trade marks for innovative services firms.

Suggested Citation

  • Christine Greenhalgh & Mark Rogers, 2006. "Trade Marks and Market Value in UK Firms," Melbourne Institute Working Paper Series wp2006n04, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  • Handle: RePEc:iae:iaewps:wp2006n04
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    File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2006n04.pdf
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    References listed on IDEAS

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    7. Hall, Bronwyn H. & Oriani, Raffaele, 2006. "Does the market value R&D investment by European firms? Evidence from a panel of manufacturing firms in France, Germany, and Italy," International Journal of Industrial Organization, Elsevier, vol. 24(5), pages 971-993, September.
    8. Greenhalgh, Christine & Longland, Mark, 2001. " Intellectual Property in UK Firms: Creating Intangible Assets and Distributing the Benefits via Wages and Jobs," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(0), pages 671-696, Special I.
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    Cited by:

    1. Ho, Shirley J. & Hsu, Su-Chu, 2010. "Leverage, performance and capital adequacy ratio in Taiwan's banking industry," Japan and the World Economy, Elsevier, vol. 22(4), pages 264-272, December.
    2. Sandner, Philipp G. & Block, Joern, 2011. "The market value of R&D, patents, and trademarks," Research Policy, Elsevier, pages 969-985.
    3. Block, Joern H. & De Vries, Geertjan & Schumann, Jan H. & Sandner, Philipp, 2014. "Trademarks and venture capital valuation," Journal of Business Venturing, Elsevier, vol. 29(4), pages 525-542.
    4. Graevenitz, Georg von, 2007. "Which Reputations Does a Brand Owner Need? Evidence from Trade Mark Opposition," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 215, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    5. de Vries, A.G.B. & Pennings, H.P.G. & Block, J.H., 2013. "Trademark or patent? The effects of market structure, customer type and venture capital financing on start-ups' IP decisions," ERIM Report Series Research in Management ERS-2013-002-STR, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.

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