Valuation of New Trademarks

Po-Hsuan Hsu, Dongmei Li (), Qin Li (), Siew Hong Teoh and Kevin Tseng ()
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Dongmei Li: Darla Moore School of Business, University of South Carolina, Columbia, South Carolina 92697
Qin Li: School of Accounting and Finance, Hong Kong Polytechnic University, Kowloon, Hong Kong
Kevin Tseng: Department of Finance, College of Management, National Taiwan University, Taipei 10617, Taiwan; Center for Research in Econometric Theory and Applications, National Taiwan University, Taipei 10617, Taiwan

Management Science, 2022, vol. 68, issue 1, 257-279

Abstract: Firms often register trademarks as they launch new products or services. We find that the number of new trademark registrations positively predicts firm profitability, stock returns, and underreaction by analysts in their earnings forecasts. Using the Federal Trademark Dilution Act (FTDA) as an exogenous shock to trademark protection, we find that greater trademark protection strengthens the predictability of new trademark registrations. Together, our evidence suggests that investors undervalue new trademark registrations.

Keywords: innovation; trademarks; exploratory trademarks; stock returns; limited attention; uncertainty; market efficiency; analyst forecast; anomalies; trading strategies (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (5)

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