Trademarks and firm market value: Evidence from new trademark-firm linked data in China

A growing stream of research conducted in developed economies has shown that trademarks are positively related to firms' market value. However, we have limited understanding of whether this finding might apply to emerging economies, many of which have developed their own unique trademark regimes and are currently experiencing exponential growth in trademark registrations. In this study, we address this gap by constructing a new dataset that links trademark registrations with listed firms in China—the first of its kind for Chinese trademarks. Using this dataset, we find that in-use trademarks (trademarks being used by firms), as well as unused trademarks registered for a firm's current businesses, are positively related to firm value; further, the strength of IPR protection in subnational regions (provinces in China) amplifies these relationships. By contrast, unused trademarks that are not registered for a firm's current businesses have no impact on firm value. We also find that trademarks and patents complement each other in enhancing firm value. We call for more future research attention to trademarks in emerging economies to improve existing understanding of the important role trademarks play in these fast-growing markets often featuring unique IPR regimes.