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|Other Titles: ||The Value-Relevance of Patent: A Test of the Life Cycle Hypothesis|
|Authors: ||Chin, Chen-Lung;Lin, Hsiou-Wei William;Chi, Hsin-Yi|
Patent;Value Relevance;Life cycle of firm
|Issue Date: ||2014-03-06 17:07:37 (UTC+8)|
|Abstract: ||本研究探討在不同的生命週期階段，資本市場對各期企業經智慧財產局核准的專利權數（非財務資訊）是否有不同評價；本文同時探討民國八十三年專利法大修前後，市場對擁有專利權數不等的公司，其所認定價值是否不同；復檢測生命週期、法規大修、與專利權間之交互作用。本文使用Anthony and Ramesh(1992)的方法尋求生命週期的替代變數。實證結果發現，專利權與股價間呈現顯著的正向關聯性，考慮不同的生命週期階段後，發現成長期樣本的總專利權數對於股價的影響大於成熟期及衰退期。專利法法規大修以後，擁有愈多（沒有）專利權的公司，股價愈高（低），且法規大修後、處在成長期的公司，每一個專利權的邊際價值高於其他各組。最後，本文改採推估的專利權「價值」變數以取代專利權「件數」變數時，所得結果仍然支持假說。|
The innovation efforts have been also widely advocated and supported by Taiwan entrepreneurs. Intellectual Property Office of Taiwan (thereafter IPOT) bulletins published the number of patents granted of each firm several times every year. Patents granted are of substantial economic importance for many firms and thus are valuable economic asset. However, under current Generally Accepted Accounting Principle, internally-developed patents are typically unrecognized in the balance sheet as accounting assets. Prior studies document that non-financial information (e.g., patents granted) is regarded as a supplement to the financial statement and is useful for the assessment of stock prices relevance. While prior studies explore the relationship between the number of patents and the stock price, little work to date focuses the relationship between the value relevance of patents and the differential stage in firm’s life cycle. The objective of this study is to investigate whether the market appraises the variable of patent number differently for a differential stage in a firm’s life cycle. Our motivation for investigating the association between value relevance of patent granted by IPOT and life cycle stems from the argument that to the extent that market growth fasts (slow) and investment is more (more) rewarding, firm tend to increate demand or cost advantage over competitors by increasing sale growth, Porter, 1980) or acquiring capital capacity (e.g., Anthony and Ramesh, 1992) in the early life cycle stage. Drawing upon these arguments, we hypothesize that market’ assessment of patents granted by IPOT is more favorable for firms in the growth stage of life cycle, compared to the stagnant stage. Aiming at exploring the value relevance of the patents, we examine Taiwan Stock Exchange firm data from 1991-2000. Specifically, we partition our samples into various life cycle portfolios based on measures introduced by Anthony and Ramesh (1992) in order to test the hypothesis that the response coefficients of firms’ patents would be greater for the growth as opposed to the stagnant portfolios. Specifically, we use four classification variables for each firm-year: dividend payout ratio (DP), sales growth rate (SG), capital expenditures (CEV), and establishment years (AGE) as life cycle descriptors. First, we rank firms on each of the four classification variables, and group them into three life cycle stages according to their trisection statistics, respectively: firms with low (high) DP, high (low) SG, high (low) CEV, and short (long) AGE are classified into the growth (stagnant) stage, and firms with DP, SG, CEV, and AGE in the middle are assigned to middle stage. In additional, this paper also uses composite score as life cycle indicator. Following prior papers (Barth et al., 2000; Kallapur and Kwan, 2004), this study test the value relevance of patent granted by regressing market value of equity on the number of patenst granted, book value of equity, and net income using pooled data for all sample. This specification is consistent with accounting evaluation model (thereafter AEM) developed by Ohlson (1995), who shows that AEM equal the discounted dividends model, under clean surplus accounting and other some assumptions. Consistent with our hypothesis, we document a monotonic decline in the response coefficients of patents from the growth to the stagnant stages. Furthermore, our findings indicate that the investors value positively (negatively) for firms with more patent (without patent) after the enforcement of new patent regulation, as predicted. In addition, we also directly examine on the differential value of patents across life cycle stages by estimating the patent value and investigating whether the benefits associated with patents granted are different among various life cycle. Based on the modified Seethamraju’ model (2000), we directly estimate value of each patent granted by IPOT using information in financial statement through Cobb-Douglas production function. The results suggest a monotonic decrease in the economic benefits from patent granted from the up- to down-streamed stage, which is in line with what we have documented in our market’ perceptions of patents analysis. Finally, our findings remain unchanged after controlling for the systematical differential across firm sizes and risks. This study complements to accounting literature on intangible assets. This paper is the attempt to examine the differential value relevance of non-financial information about intellectual property rights (i.e. patents) on the different life cycle stages, and may add to prior studies on the value relevance of the financial measures such as capital expenditure, cash flow and accruals earnings on various stages in firm’s life cycle (Anthony and Ramesh, 1992; Black, 1998).
|Relation: ||管理學報, 21(2), 175-197|
|Data Type: ||article|
|Appears in Collections:||[會計學系] 期刊論文|
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