This thesis attempts to analyze a part of the big and complex process of how intellectual
property ownership and technological innovation influence the performance of firms and
their revenues. Here I analyze a firm's stock market performance as a function of the
quantity and quality of intellectual property (patents) owned by the firm in context of the
three US high-technology sectors, Pharmaceuticals, Semiconductors and Wireless. In
these sectors, value of a firm is predominantly driven by the technologies which a firm
owns. I use citation based indicators and number of claims to measure the quality of
patents. This research presents empirical evidence for the hypothesis that in high-tech
sectors, companies which generate better quality intellectual property perform better than
average in the stock market. I also posit that firms which are producing better quality
technologies (good R&D) invest more in R&D regardless of their market performance.
Furthermore, though smaller firms get relatively less returns on quality and quantity of
innovation, they tend to invest a bigger fraction of their total assets in R&D when they
are generating high quality patents. Larger firms enjoy the super-additivity effects in
terms of market performance as the same intellectual property gives better returns to
them. In addition, returns to R&D are relatively higher in the pharmaceutical industry
than semiconductor or wireless industries.M.S.Committee Chair: Hicks, Diana; Committee Co-Chair: Rouse, Bill; Committee Member: Bodner, Dougla
