Analysis of the relationship between technological diversification and enterprise value using patent data

Yusuke Matsumoto (), Aiko Suge () and Hiroshi Takahashi ()
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Yusuke Matsumoto: Keio University
Aiko Suge: Keio University
Hiroshi Takahashi: Keio University

Information Technology and Management, 2025, vol. 26, issue 2, No 7, 247-270

Abstract: Abstract As natural language processing technology advances, its application to finance is growing. We focus on technological diversification resulting from R&D activities, one of the concerns for firms requiring efficient business management. We analyze the relationship between technological diversification and enterprise value using text information of patents and examine text information's usefulness in corporate finance. Specifically, we created a firm's technological diversification index from the text information in the patents and the firm's excess value from its financial data and analyzed the relationship between them. We analyzed Japanese firms that have been listed on the First Section of the Tokyo Stock Exchange and have applied for patents during the period 2002–2015. As a result, we found that (1) the spread of technology in multiple ways could impair enterprise value, and (2) the use of text information can be more valuable than the use of specific standards indexes such as the International Patent Classification (IPC). This study shows interesting results on the relationship between technological diversification and enterprise value and implies the applicability of unstructured data to finance research. A detailed analysis is for further study.

Keywords: Corporate finance; Diversification; Excess value; Patent; Natural language processing (search for similar items in EconPapers)
JEL-codes: G10 G32 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10799-023-00411-0

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