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Griffiths, William; Webster, Elizabeth --- "Market Valuation of Australian Intellectual Property" [2006] ELECD 351; in Bosworth, Derek; Webster, Elizabeth (eds), "The Management of Intellectual Property" (Edward Elgar Publishing, 2006)

Book Title: The Management of Intellectual Property

Editor(s): Bosworth, Derek; Webster, Elizabeth

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781845421120

Section: Chapter 8

Section Title: Market Valuation of Australian Intellectual Property

Author(s): Griffiths, William; Webster, Elizabeth

Number of pages: 13

Extract:

8. Market valuation of Australian
intellectual property
William Griffiths and Elizabeth Webster

1 INTRODUCTION

Company-level `market value' studies seek to estimate the returns to
investment using stock market, book value and intellectual property
(IP) data. These studies, which were initiated by Griliches (1981), aim to
establish whether intangible assets, especially those arising from innovation,
contribute to future company profits. In some ways this issue is trivial, since
we would not expect companies to repeatedly invest in intangible capital
unless they previously had positive returns. Predictably therefore, we find
that significant and positive relationships between patents and the value
of the company have become a `stylized fact' around the world. Instead of
seeking to reconfirm this `fact', applied economists are now using this model
to test whether the value of innovative activities varies with characteristics
such as company size, industry and competition, among other things.
This chapter uses annual data from over 300 Australian companies from
1989 to 2002 to examine the relationship between the effort companies
make creating intangible assets activity and future anticipated profits.
Although there have been other company level estimations of this model
(that is, Bosworth and Rogers 2001), there have been no previous Australian
company studies which span a long time period before. This type of data
set, which is called `panel data', is a combined cross-sectional time-series
data. Panel estimation techniques use the information embodied in this data
to control for unmeasured-company characteristics that do not vary over
time. Examples of ...