By
Mark Hirschey, University of Kansas, Lawrence, U.S.A.
Description
The contribution of research and development to a company's market value has grown considerably in recent years. In the mid-1970s, accountants
were able to capture on their ledgers 90-95% of a firm's book value, but by 2000 the importance of intangible assets had grown to the
point where they could account for only 13-15%. Financial economists and accountants have investigated the link between a firm's market
value and its R&D spending, and various factions advocate a variety of positions on the amount and rate of investment, investors' ability
to capture returns on that investment, and ways to measure value, investment, and returns.
'Tech Stock Valuation' extends the R&D literature
by providing detailed direct evidence on the market value implications of inventive and innovative output. Specifically, the book demonstrates
that stock-price effects of patent output are most pronounced in the case of of high-quality patents, where patent quality is measured
by scientific merit. Scientific measures of patent quality give tech stock investors and R&D managers a valuable new tool that can be
used to measure R&D program effectiveness. At the same time, it gives investors a new tool to help them assess the value of hard-to-measure
intangible assets.
Audience:
Professionals working in finance and accounting; investment professionals and industry analysts who work for companies that engage in
research and development; MBA students; economists working in industrial organizations, microeconomics, and contract theory.
