Tech Stock Valuation - Softcover

Hirschey, Mark

Softcover

ISBN 10: 0123995620 ISBN 13: 9780123995629

Publisher: Academic Press, 2013

The contribution of research and development to a company's market value has grown considerably in recent years. In the mid-1970s, accountants were able to capture on their ledgers 90-95% of a firm's book value, but by 2000 the importance of intangible assets had grown to the point where they could account for only 13-15%. Financial economists and accountants have investigated the link between a firm's market value and its R&D spending, and various factions advocate a variety of positions on the amount and rate of investment, investors' ability to capture returns on that investment, and ways to measure value, investment, and returns. 'Tech Stock Valuation' extends the R&D literature by providing detailed direct evidence on the market value implications of inventive and innovative output. Specifically, the book demonstrates that stock-price effects of patent output are most pronounced in the case of of high-quality patents, where patent quality is measured by scientific merit. Scientific measures of patent quality give tech stock investors and R&D managers a valuable new tool that can be used to measure R&D program effectiveness. At the same time, it gives investors a new tool to help them assess the value of hard-to-measure intangible assets.

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Book Description:

'Tech Stock Valuation' extends the R&D literature by providing detailed direct evidence on the market value implications of inventive and innovative output. Specifically, the book demonstrates that stock-price effects of patent output are most pronounced in the case of of high-quality patents, where patent quality is measured by scientific merit. Scientific measures of patent quality give tech stock investors and R&D managers a valuable new tool that can be used to measure R&D program effectiveness. At the same time, it gives investors a new tool to help them assess the value of hard-to-measure intangible assets.

From the Back Cover:

"The impact of the highly variable capital market conditions--such as we saw during the late 1960s, the mid 1980s, and the late 1990s--on the evolution of high-technology industries remains little understood, but is critically important to the future growth of the U.S. economy. Tech Stock Valuation takes an initial look at some of these very important but complex issues." ―Josh Lerner, Jacob H. Schiff Professor of Investment Banking, Harvard Business School, Boston, MA, USA

Tech Stock Valuation shows how the "irrational exuberance" of the mid- to late-1990s has given way to the equally irrational "extreme pessimism" of present-day tech stock investors. In addition, it documents how changing investor psychology can affect investor returns in the short run, and illustrates how economic forces shape long-run returns. Rattled by the first severe bear market in a decade, manic-depressive investors risk missing out on the inevitable rebound in tech stock valuations.

Tech Stock Valuation extends the R&D literature by providing detailed direct evidence on the market value implications of inventive and innovative output. Specifically, the book demonstrates that stock-price effects of patent output are most pronounced in the case of high-quality patents, where patent quality is measured by scientific merit. Scientific measures of patent quality give tech stock investors and R&D managers a valuable new tool that can be used to measure R&D program effectiveness. At the same time, it gives investors a new tool to help them assess the value of hard-to-measure intangible assets.

About the Author Mark Hirschey is Professor and Stockton Research Fellow in the School of Business at the University of Kansas, where he teaches undergraduate and graduate courses in managerial economics and finance. Author of more than 75 academic research articles, scholarly books, and scholarly textbooks, he has earned research awards for his studies on the effects of the Internet on investor behavior and market efficiency. His work on the economic implications of corporate restructuring illustrates the importance of managerial incentives in the stock market's ongoing assessment of managerial effectiveness. He is the founding president of the Association of Financial Economists.

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