Working Paper: NBER ID: w7741
Authors: Bronwyn H. Hall; Adam Jaffe; Manuel Trajtenberg
Abstract: As patent data become more available in machine-readable form, an increasing number of researchers have begun to use measures based on patents and their citations as indicators of technological output and information flow. This paper explores the economic meaning of these citation-based patent measures using the financial market valuation of the firms that own the patents. Using a new and comprehensive dataset containing over 4800 U. S. Manufacturing firms and their patenting activity for the past 30 years, we explore the contributions of R&D spending, patents, and citation-weighted patents to measures of Tobin's Q for the firms. We find that citation-weighted patent stocks are more highly correlated with market value than patent stocks themselves and that this fact is due mainly to the high valuation placed on firms that hold very highly cited patents.
Keywords: No keywords provided
JEL Codes: O31; O38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| citation-weighted patent stocks (G12) | market value (D46) |
| R&D spending (O32) | Tobin's Q (G19) |
| patents (O34) | Tobin's Q (G19) |
| citation-weighted patent stocks (G12) | high valuation of firms (G32) |