Public Policy and the Efficiency of Capital Markets
New Horizons in Intellectual Property series
Chapter 5: IPR management, corporate disclosures, and stock market valuations in the pharmaceutical industry
The exploratory study in Chapter 4 set out how pharmaceutical firms conduct their IPR management, and its association with their financial performance. Taking these findings, together with past research showing that IPR contribute to both firm productivity and market values (see Section 2.4), as well as research pointing to the ability of companies to reduce asymmetric information, and thereby also stock market uncertainty (see Section 2.8.3), through voluntary IPR reporting, it seems reasonable to assume that information on firms’ IPR management is value-relevant – that is, under the assumption of informationally efficient stock markets, it should be reflected in share prices. In this chapter, the assumption of informational market efficiency is examined in relation to the relationships identified between IPR management and firms’ financial performance (see Section 4.6). These relationships are operationalised as in Figure 5.1, and examined accordingly. Secondly, previous studies as well as the exploratory interviews reveal that some firms report on their IPR management on a voluntary basis (see Section 4.7).
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