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Patent quality, cumulative innovation and market value: Evidence from Japanese firm level panel data

Sadao Nagaoka

No 05-06, IIR Working Paper from Institute of Innovation Research, Hitotsubashi University

Abstract: We examine empirically how patent quality in terms of forward citation and science linkage affect the market value of a firm. We find that both indicators affect the market value of a firm significantly even if we extensively control the effects of the other major determinants of the market value, including R&D investment and current return on asset. In addition, the forward citation affects the market value more in cumulative innovation area such as in IT, consistent with a theoretical proposition that the value of having a dependent patent is larger in the industry where innovation is cumulative among firms.

Keywords: patent quality; market value; forward citation; science linkage; cumulative innovation (search for similar items in EconPapers)
JEL-codes: L10 O32 (search for similar items in EconPapers)
Date: 2005-02
Note: Presented to the Conference on IT Innovation, Tokyo, December 2004.
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http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/15975/1/070iirWP05-06.pdf

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