Scholarly record

INNOVATION EFFECT ON THE VALUE OF FIRMS IN TAIWANВ’S SEMICONDUCTOR INDUSTRY

T. Chatzigagios, K. Lyroudi

Abstract

The new challenge before todayВ’s CEOs and executives is to realize that intellectual property (patents, trademarks, copyrights, etc) are assets that enhance corporate value and offer the company a new competitive advantage. The proper exploitation and measurement of intellectual property or intangibles gives strategic and financial benefits to the underlying organization.The number of patents of the underlying company are used in the literature among other variables as a proxy for intellectual property or innovation. This paper has a two-fold objective. On the theoretical part it discusses some legal aspects on patents, it analyses the concept of patents as intangible assets and the equivalent property rights. On the empirical part it investigates whether the number of patents granted affect the value of the underlying company and if they do so, in what way. We use the number of patents granted following the relevant literature as proxies of corporate innovation.This paper focuses on the market of Taiwan. Our sample consists of companies in the integrated circuit (IC) industry of Taiwan for the period 2002 to 2010. We applied several regression models to test our hypotheses. Our empirical results indicated that for the selected time period the number of patents granted did not have any significant impact on the firm value for the years 2002 to 2009, while this variable had a significant and positive impact only in 2010.

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