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Innovation and Market Value

Paper:ewp-fin/9902009
From:    
Date: Thu, 18 Feb 1999 13:37:47 -0600 (CST)

Title: Innovation and Market Value
Author: Bronwyn H. Hall (Oxford University, University of California, Berkeley, NBER, and IFS)
Contact:
Comments: Type of Document - Acrobat.pdf; pages: 35; figures: included
Keywords: innovation, intangibles, R&D, patents, market value, patent citations
JEL: G12, O30
EWPA-references:
Report-no: IBER-CalBerk Econ E99-265

Abstract:

This paper surveys recent findings about how the financial markets value the knowledge assets of publicly traded firms. The motivation for using market value equation to price knowledge assets is discusssed and the theory behind this equation is briefly presented. Then the empirical literature that relates Tobin's q to R&D and patent measures is surveyed and new results based on U.S. data through 1995 are presented. The conclusion is that the market value of the modern manufacturing corporation is strongly related to its knowledge assets, and that the patent measures contain information about this value above and beyond that conveyed by the usual R&D measure.

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