Valuation of New Trademarks

71 Pages Posted: 15 Aug 2018 Last revised: 11 Sep 2020

See all articles by Po-Hsuan Hsu

Po-Hsuan Hsu

National Tsing Hua University - Department of Quantitative Finance

Dongmei Li

University of South Carolina - Darla Moore School of Business - Department of Finance

Qin Li

Hong Kong Polytechnic University

Siew Hong Teoh

UCLA Anderson School of Management

Kevin Tseng

National Taiwan University - Department of Finance; National Taiwan University - Center for Research in Econometric Theory and Applications

Date Written: September 11, 2020

Abstract

Firms often register trademarks as they launch new products or services. We find that the number of new trademark registrations positively predicts firm profitability, stock returns, and underreaction by analysts in their earnings forecasts. Using the Federal Trademark Dilution Act (FTDA) as an exogenous shock to trademark protection, we find that greater trademark protection strengthens the predictability of new trademark registrations. Together, our evidence suggests that investors undervalue new trademark registrations.

Keywords: Innovation, Trademarks, Exploratory trademarks, Stock returns, Limited attention, Uncertainty, Market efficiency, Analyst forecast

JEL Classification: E22, G11, G12, G14, O34, M31

Suggested Citation

Hsu, Po-Hsuan and Li, Dongmei and Li, Qin and Teoh, Siew Hong and Tseng, Kevin, Valuation of New Trademarks (September 11, 2020). Available at SSRN: https://ssrn.com/abstract=3224187 or http://dx.doi.org/10.2139/ssrn.3224187

Po-Hsuan Hsu

National Tsing Hua University - Department of Quantitative Finance ( email )

101, Section 2, Kuang-Fu Road
Hsinchu, Taiwan 300
China

Dongmei Li

University of South Carolina - Darla Moore School of Business - Department of Finance ( email )

1014 Greene Street
Columbia, SC 29208
United States

Qin Li

Hong Kong Polytechnic University ( email )

Hung Hom
Hong Kong
Hong Kong

Siew Hong Teoh

UCLA Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

HOME PAGE: http://www.anderson.ucla.edu/faculty-and-research/accounting/faculty/teoh

Kevin Tseng (Contact Author)

National Taiwan University - Department of Finance ( email )

1, Sec. 4, Roosevelt Road
Taipei, 106
Taiwan

National Taiwan University - Center for Research in Econometric Theory and Applications ( email )

1 Sec. 4, Roosevelt Road
Taipei 106, 106
Taiwan

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