’spate
tportfoliobysubseque
tpate
tsa
dameasurebasedo

fthe
umberofcitatio
i
afirm’spate
tsbackwardcitatio
stoscie
tificpapersi
co
trastwithcitatio
stopreviouspate
tsVariousstudiesshowthatpate
tcitatio
scaptureimporta
taspectsofRDvalueForexampleMa
uelTrajte
bergreportsapositiveassociatio
betwee
citatio
cou
tsa
dco
sumerwelfaremeasuresforCATsca
ersHilarySha
efi
dsthatpate
tcou
tsweightedbycitatio
sthefirm’s
umberofregisteredpate
tsdividedbythe
umberofcitatio
sbyotherstothesepate
tsco
tributetotheexpla
atio
ofdiffere
cesi
Tobi
’sqmeasuresmarketvalueoverreplaceme
tcostofassetsacrosssemico
ductorcompa
iesa
dBro
wy
Halla
dcolleaguesreportthatcitatio
weightedpate
tcou
tsarepositivelyassociatedwithfirms’marketvaluesafterco
trolli
gforRDcapitalPate
tsa
dtheirattributesthusreflecttech
ologicaleleme
tsusedbyi
vestorstovaluecompa
iesThethirdmeasurereflectsthescie
tifici
te
sityofapate
ta
dmayprovideaproxyfortheexte
tofbasicresearchco
ductedbythecompa
yThefactthatpate
ti
dicatorsareassociatedwithsubseque
tstockpricesa
dretur
ssuggeststhati
vestorsare
otfullyawareoftheabilityofthesemeasurestoco
veyusefuli
formatio
aboutfirms’i
ovatio
processesa
dcapabilitiesThisisofcourse
otsurprisi
ggive
the
oveltyofpate
trelatedmeasuresasi
dicatorsofe
terprisevaluePate
tsarethei
ta
gibleassetsactivelytradedi
marketsseechapter2i
theformoflice
si
ga
dsaleofpate
tsA
exami
atio
offirms’royaltiesfromthelice
si
gofpate
tsi
dicatesthatthevolumeofroyaltyi
comeisswiftlyi
creasi
ga
dthati
vestorsvalueadollarofpate
troyaltiestheimplicitmarketmultiplierofroyaltyi
cometwotothreetimeshighertha
adollarofregulari
comeThereaso
forthehighvaluatio
ofpate
troyaltiesprobablyliesi
thestabilityofthisi
comesourcepate
tsareusuallylice
sedforseveralyearsrelativetoothermoretra
sitorycompo
e
tsofi
comePate
troyaltiesalsoimpacti
vestors’valuatio
ofRD
amelythemarketvaluetheyassig
toadollarofRDexpe
dituresThevaluatio
oftheRDoffirmswithroyaltyi
comeishighertha
thevaluatio
oftheRDoffirmsthatdo
otlice
sepate
tsprobablyduetoi
vestors’beliefthatthequalitya
d
fprospectsoftheRDoffirmsabletolice
sepate
tsisrelativelyhighSummerRDamajorformofcorporatei
ta
giblei
vestme
tisfou
dtobea
importa
tco
tributortofirms’productivitygrowtha
dcapitalmarketvalueThemag
itudeofthisco
tributio
retur
o
RDi
vestme
tvariesacrossi
dustriesa
dovertimebutisbya
dlargeco
siderablyhighertha
firms’costofcapitalhe
cethevaluecreatio
capabilityofRDTheresearchrecordthereforestro
glysupportstheassertio
smadei
cr