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Innovation and Market Value

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  • Bronwyn H. Hall

Abstract

Recent research on financial market valuation of the knowledge assets of publicly traded firms is surveyed. The motivation for using a market value equation to price knowledge assets is discussed and the theory behind this equation is briefly presented. Then the empirical literature that relates Tobin's q or the market to book value ratio to R&D and patent measures is surveyed and new results based on United States data through 1995 are presented. The conclusion is that the market value of the modern manufacturing corporation is strongly related to its knowledge assets, and that patent measures contain information about this value above and beyond that conveyed by the usual R&D measures.

Suggested Citation

  • Bronwyn H. Hall, 1999. "Innovation and Market Value," NBER Working Papers 6984, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:6984
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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