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

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  • Matthew J. Baker

    () (United States Naval Academy)

  • Brendan M. Cunningham

    () (United States Naval Academy)

Abstract

We use a novel database on U. S. federal court decisions to measure the changes in the state of copyright protection in both statute and case law. We combine an index of copyright breadth derived from this database with a quarterly panel of firms in creative industries over the years 1986-1998. Using this data, we measure the impact of changes in the breadth of copyright on the market valuation of firm equity. We maintain the assumption that equity markets will incorporate the value of copyright innovations into the price of equity. After controlling for a variety of fundamental determinants of ¯rm-level excess returns to equity, we find that a court case broadening copyright is associated with a statistically significant 23-45 basis points increase in a firm's excess return. Our results obtain across both 4-5 year sub-samples and the size distribution of firms.

Suggested Citation

  • Matthew J. Baker & Brendan M. Cunningham, 2004. "Court Decisions and Equity Markets: Estimating the Value of Copyright Protection," Departmental Working Papers 4, United States Naval Academy Department of Economics.
  • Handle: RePEc:usn:usnawp:4
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    Cited by:

    1. Stoneman, Paul, 2011. "Soft Innovation: Economics, Product Aesthetics, and the Creative Industries," OUP Catalogue, Oxford University Press, number 9780199697021.
    2. Christine Greenhalgh & Mark Rogers, 2007. "The Value of Intellectual Property Rights to Firms," Economics Series Working Papers 319, University of Oxford, Department of Economics.
    3. 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.
    4. 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, September.
    5. Handke, Christian & Girard, Yann & Mattes, Anselm, 2015. "Fördert das Urheberrecht Innovation? Eine empirische Untersuchung," Studien zum deutschen Innovationssystem 16-2015, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin.
    6. 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.
    7. Ivan Png, 2006. "Copyright: A Plea for Empirical Research," Levine's Working Paper Archive 321307000000000484, David K. Levine.
    8. Felix Oberholzer-Gee & Koleman Strumpf, 2010. "File Sharing and Copyright," Innovation Policy and the Economy, University of Chicago Press, vol. 10(1), pages 19-55.
    9. Jen-Te Yao, 2005. "How a Luxury Monopolist Might Benefit from a Stringent Counterfeit Monitoring Regime," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 4(3), pages 177-192, December.
    10. Depoorter Ben & Holland Adam & Somerstein Elizabeth, 2009. "Copyright Abolition and Attribution," Review of Law & Economics, De Gruyter, vol. 5(3), pages 1063-1080, December.
    11. Ivan Png & Qiu-hong Wang, 2007. "Copyright Duration and the Supply of Creative Work," Levine's Working Paper Archive 321307000000000478, David K. Levine.

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