Value-Relevance of Knowledge Spillovers: Evidence from Three High-Tech Industries

Michael K. Fung
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Michael K. Fung: Department of Business Studies, Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong

Chapter 2 in Advances in Quantitative Analysis of Finance and Accounting:New Series, 2004, pp 17-31 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractThe objective of this study is to examine an important aspect of R&D capital — knowledge spillovers — as an explanation for the observed inconsistency between market values and book values. By tracing the linkages between inventions across time as established by patent citations, knowledge spillovers are decomposed into intraindustry, internal, and interindustry spillovers. The empirical findings from this study conclude that the intensity of knowledge spillovers is value-relevant. The results also suggest that, among the three components of spillovers, intraindustry spillovers have the strongest impact on market-to-book ratios. These results have implications on strategic R&D activities aiming to increase market values.

Keywords: Discretionary Accruals; Futures Price Volatility; Bid-Ask Spread Components; CEO Compensation; Executive Cash Compensation; Convertible Debts; Environmental Liabilities (search for similar items in EconPapers)
Date: 2004
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