Innovation and Market Value

36 Pages Posted: 25 May 2006 Last revised: 3 Aug 2022

See all articles by Bronwyn H. Hall

Bronwyn H. Hall

University of California at Berkeley; National Bureau of Economic Research (NBER); Institute for Fiscal Studies (IFS); Max Planck Institute for Innovation and Competition

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Date Written: February 1999

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

Hall, Bronwyn H., Innovation and Market Value (February 1999). NBER Working Paper No. w6984, Available at SSRN: https://ssrn.com/abstract=226407

Bronwyn H. Hall (Contact Author)

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