Valuation effects of patent quality: A comparison for Japanese and U.S. firms

Abstract

For both Japanese and U.S. firms, measures of patent quality based upon the number of scientific citations have robust market-value influences. These results suggest that investors regard scientific measures of the quality of inventive output as useful indicators of the economic value tied to patenting activity. The possibility of country-specific influences on the effectiveness of patenting activity is also suggested. These findings are of practical relevance because they suggest that scientific measures of patent quality have the potential to offer managers useful guidance concerning the quantity and quality of inventive output and the effectiveness of patent investments.