Abstract
ABSTRACT This paper investigates the relationship between the innovative activity of the top corporate R&D investors worldwide and their market valuation. The analysis exploits a sample of more than 1,250 publicly listed Multinational Corporations (MNCs) and their intellectual property rights (IPR) – patents and trademarks – filed between 2005 and 2012. The study contributes to the literature on the IPR-market value link by examining the premium resulting from the interactive use of different IPR. Moreover, the empirical setting allows differentiating the effects of an increase in market value derived from additional IPR (within-effects) with respect to the premium received for holding more IPR than the competitors (between-effects). The findings suggest that investors value the simultaneous use of the two IPRs and form their expectations by benchmarking firms. Finally, significant industrial specificities are observed in the individual effects of patents, trademarks and their interactions on the market value of firms.
Highlights
The recognition of knowledge as the fundamental resource for sustainable economic competitiveness and growth has come with an upsurge in the investments into knowledgebased assets
While the economic rationale for R&D can be related to the upgrading in absorptive capabilities, to exploration purposes and greater opportunities for innovations, patents are commonly justified by the uncertainty to appropriate the expected returns to such intangible innovation investments
Looking back at the between effect of intellectual property rights (IPRs), our results clearly show that financial markets do value the technical and commercial knowledge conveyed by the corporate patents and trademarks
Summary
The recognition of knowledge as the fundamental resource for sustainable economic competitiveness and growth has come with an upsurge in the investments into knowledgebased assets. They can carry valuable information for investors and therewith influence the valuations of companies on financial markets They may enable firms to extend the "monopoly" rents of patented innovations beyond the patent term (Statman and Tyebjee, 1981) by steering potential customers through the brand and symbols protected with trademarks (Rujas, 1999). Following these arguments, our study exploits a sample of the top R&D investors worldwide to assess the contribution of their patents and trademarks portfolios on their valuation on financial markets.
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