Innovation and the Market Value of UK Firms, 1989-1995

Abstract

Using a new data set covering a sample of UK firms, 1989-1995, we study the impact of innovation and innovation assets on firm value. We find, for all reporting firms, that the flow of R&D and the use of new technologies (as measured by investment in tangible assets) have significant positive impacts on market value. A patent count variable is insignificant in cross section estimates, although significant but impacting negatively in panel estimates. A sample of firms reporting their R&D for the first time yields much larger estimates of the impact of R&D on market value than in the sample of all reporting firms.