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Valuation of New Trademarks

Author

Listed:
  • Po-Hsuan Hsu

    (College of Technology Management, National Tsing Hua University, Hsinchu City 300, Taiwan)

  • 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)

  • Siew Hong Teoh

    (Paul Merage School of Business, University of California, Irvine, California 29208)

  • 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)

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.

Suggested Citation

  • Po-Hsuan Hsu & Dongmei Li & Qin Li & Siew Hong Teoh & Kevin Tseng, 2022. "Valuation of New Trademarks," Management Science, INFORMS, vol. 68(1), pages 257-279, January.
    • Handle: RePEc:inm:ormnsc:v:68:y:2022:i:1:p:257-279
    DOI: 10.1287/mnsc.2020.3887
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    References listed on IDEAS

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    Cited by:

    1. Yang, Bin & An, Zhe & Gao, Xin & Li, Donghui, 2023. "Trademarks and the cost of equity capital," Journal of Corporate Finance, Elsevier, vol. 83(C).
    2. Xiao, Yangao & Han, Nianchen & Li, Rui & Ran, Huaqing & Zhou, Shihao & Tong, Tony W., 2024. "Trademarks and firm market value: Evidence from new trademark-firm linked data in China," Research Policy, Elsevier, vol. 53(2).
    3. Naveen Kumar & Liangfei Qiu & Subodha Kumar, 2022. "A Hashtag Is Worth a Thousand Words: An Empirical Investigation of Social Media Strategies in Trademarking Hashtags," Information Systems Research, INFORMS, vol. 33(4), pages 1403-1427, December.
    4. Li, Tongxia & Lu, Chun & Routledge, James, 2023. "Brand capital on debt maturity structure," Journal of Contemporary Accounting and Economics, Elsevier, vol. 19(3).

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