The Stock Market Valuation of Information on Non-technological Innovation: Evidence from New Trademarks

• In Event: DSFI Session 3

Abstract

This study examines the value relevance of new trademarks as a measure of non-technological innovation such as product innovation and marketing innovation. I compile a new dataset that contains 74,022 trademarks registered with the United States Patent and Trademark Office (the USPTO) by S&P 1500 firms from 1993 to 2011. I find that (1) new trademarks predict accounting fundamentals such as future sales and profits in the first year after registration; and (2) new trademarks provide incremental explanatory power for contemporaneous returns after controlling for other major value-relevant variables. The empirical findings support that new trademarks measure non-technological innovation and provide value-relevant information to market participants.

Author

• Qin Li, University of California-Irvine