Patent Ownership and Stock Market Value

This book attempts to analyze a part of the big and complex process of how intellectual property ownership and technological innovation influence the performance of firms and their revenues. Stock market performances of firms as a function of the quantity and quality of intellectual property (patents) owned by the firms have been analyzed for three US high-technology sectors, Pharmaceuticals, Semiconductors and Wireless. Citation based indicators and number of claims were used to measure the quality of patents to present an empirical evidence for the hypothesis that in high-tech sectors, companies which generate better quality intellectual property perform better than average on the stock market. Furthermore, though smaller firms get relatively lesser returns on quality and quantity of R&D they tend to invest a bigger fraction of their total assets in R&D when they are generating high quality patents. Larger firms enjoy the super-additivity effects in terms of market performance as the same intellectual property gives better returns for them and returns to R&D are relatively more in the pharmaceutical industry than semiconductor or wireless industries.