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.

Key Features

*Provides detailed direct evidence on the market value implications of inventive and innovative output *Based on recent research, much of which Dr. Hirschey has pioneered *Gives financial professionals a new tool for assessing R&D quality and its relation to market valuation


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.

Table of Contents

Making Sense of the Market Environment; What Caused the Tech Bubble? Investment Advice on the Internet; A Dissertation on Tulips and AOL; The Crash of 2000-2002; Making Sense of Company Valuation; Stock-Price Effects of R&D Expenditures; Valuation Effects of Patent Quality; Goodwill Write-off Decisions; Shark Repellents and R&D; Corporate Governance and the Legal Environment.


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© 2004
Academic Press
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About the author

Mark Hirschey

Mark Hirschey is the Anderson Chandler Professors of Business at the University of Kansas.

Affiliations and Expertise

University of Kansas, Lawrence, U.S.A.


"The impact of the highly variable capital market conditions--such as we saw during the late 1960s, the mid 1980s, and the late 1990s--on the evolution of high-technology industries remains little understood, but is critically important to the future growth of the U.S. economy. Tech Stock Valuation takes an initial look at some of these very important but complex issues." --Josh Lerner, Jacob H. Schiff Professor of Investment Banking, Harvard Business School, Boston, Massachusetts, U.S.A.