Prediction of Potential Market Value Using Patent Citation Index

Introduction Patent statistics have frequently been used as both technological and economic indicators, however, in order to fully utilize patent data in economic analyses, we must link patents to economic activity at a level of industry or product. Many previous pieces of research showed the effectiveness of patents citation index (PCI), containing annual citation information, on economic indicators of respective firms. Hall et al. (2005) have studied the relation between a market value and PCI using the Tobin's q approach, and Patel and Ward (2011) have compared the stock market value of firms with the patent citation using the event study methodologies. Both studies showed that Patent statistics can be effectively used to micro-level economic analyses and the increase of PCI has the positive effect on the corresponding market value. Meanwhile, our study aims to prove the effectiveness of PCI on the economic value of industry, so-called Meso-level study and, in this case, it is essential to develop technology-industry concordance method.