The Impact Of Trademark On Market Value

Trademark as a sign which can identify the products and services of a company from their competitors, and firms use Trademarks to signal to consumers about qualities of product and service.This function of trademark solves the information asymmetry between seller and buyer, and remedies the failure of market. It decreases the search cost of consumers, helps them making decisions, and also builds good reputation for companies, increases their market shares, because of this, the company will maintain consistent quality of product or invest more in product innovation and improve the qualities of product, and then the market value. Moreover,Trademarks may also be a suitable indicator of innovation, reflects companies’ innovation activities. The brand the incumbent firms built may become the barriers to entry of the new firms. A trademark can be used by the firm own, or can be transferred, and also can be licensed use for fee. All of the above may have some effect on the improvement of the market value of firms. The questions I am going to answer are, do trademarks have any effect on the market value of firms? And the effect trademarks have on firms’ market value has any difference between trademark-intensive industries and non trademark-intensive industries? Hence, two hypotheses have been made; first, trademarks have significant positive effect on market value. Second, the effect has a significant difference between trademark-intensive industries and non trademark-intensive industriesAccording to the classification of trademark-intensive industries and non trademark-intensive industries in China, 5 trademark-intensive industries and 5 non trademark-intensive industries, 10 industries, 394 listed companies in all were chosen as sample to go through the two question mentioned above. Chosen the natural logarithm of market value as a dependent variable, the natural logarithm of trademark intensity, well-known trademark, the bread of trademark, advertising of trademark, and trademark-intensive industries as independent variables, and also control the tangible assets, debt structure and other factors that may make influence on the market value of firms. It is found that trademark intensity and advertising of trademark have a significant positive effect on market value, but the other three do not. The first hypothesis has been proved, but the second hasn’t. Even though, the results have some implications for the companies’ trademark strategies and the further research.