Information ambiguity, patents and the market value of innovative assets

Research and development (R&D) is often essential for firms’ profitability and growth. At the same time, R&D is long-term and risky. We show that innovation activities lead to information ambiguity about the future value of firms’ assets. This effect appears to be more pronounced for small and less reputed firms. Information ambiguity further lowers firms’ market value and, in particular, the market value of innovative assets. We further show that high quality patents mitigate the negative effect of information ambiguity to some extent.

Hussinger, Katrin und Sebastian Pacher (2019), Information ambiguity, patents and the market value of innovative assets, Research Policy 48(3) , 665-675