Market value and patent citations

Bronwyn H. Hall, Adam Jaffe, Manuel Trajtenberg

Research output: Contribution to journalArticlepeer-review

Abstract

We explore the usefulness of patent citations as a measure of the "importance" of a firm's patents, as indicated by the stock market valuation of the firm's intangible stock of knowledge. Using patents and citations for 1963-1995, we estimate Tobin's q equations on the ratios of R&D to assets stocks, patents to R&D, and citations to patents. We find that each ratio significantly affects market value, with an extra citation per patent boosting market value by 3%. Further findings indicate that "unpredictable" citations have a stronger effect than the predictable portion, and that self-citations are more valuable than external citations.

Original languageEnglish
Pages (from-to)16-38
Number of pages23
JournalRAND Journal of Economics
Volume36
Issue number1
StatePublished - 2005

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