Abstract
This study explores the various effects of technology trade on the sustainable market value of firms in 36 OECD member countries using panel data estimations. To proxy technology trade activities, our study uses the technology export and import growths of intellectual property rights (IPRs). We suggest that technology imports, proxied by IPR imports, increase the market value of firms in our sample countries. The net technology imports (exports) are also positively (negatively) associated with the sustainable value of the firms. We use panel data regression to analyze the specific effects of the trade (i.e., imports and exports) of technology assets, proxied by IPRs, on the market value of firms proxied by country benchmark composite stock returns in 36 OECD member countries. For robustness, our study uses an instrumental variable estimation to check for the possible effects of endogeneity biases for the baseline results. System dynamic panel regressions further examine the effect of the dependent variable’s persistence. We find evidence of nonlinear effects for IPR exports and net IPR trade on the sustainable market value of firms. The positive effect of technology imports on the market value of firms is stronger at the lower and middle levels of the distribution of the firm value of stock returns, and this suggest heterogenous effects of technology trade across the quantiles. Overall, the empirical findings from our panel study suggest that the positive effects of technology trade for the market value of firms are due to the effect of its imports rather than exports.
Highlights
In the knowledge based economy, the technological capability of a firm, such as its intellectual property rights (IPRs), should form a part of their sustainable development and market valuation in financial markets
We systematically investigated a variety of effects of technology trade of imports and exports on the market value of firms using composite stock returns in the 36 OECD
To proxy technology trade activities in the sample countries, we used the growth of IPR imports and exports for imports and exports, respectively
Summary
In the knowledge based economy, the technological capability of a firm, such as its intellectual property rights (IPRs), should form a part of their sustainable development and market valuation in financial (stock) markets. Despite the importance of both intangible technology assets and technology trade on firms’ market valuation, studies on the effects of firms’ IPRs on stock market valuation are sparse [14,17,19]. Our study aims to systematically and rigorously investigate the effects of firms’ trade of technology imports and exports on their stock market valuation at a composite return level, for a sample of Organisation for Economic Co-operation and Development (OECD) countries. We analyze the specific effects of technology trade on stock market valuation depending on the trade balance (i.e., surplus and deficit) of the sample countries and its nonlinear and heterogenous effects on the valuations These findings are a novelty of our study.
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
