THE MARKET VALUATION OF KNOWLEDGE ASSETS

This paper studies the market valuation of R&D in Denmark for 1989-2001, adding to the limited number of studies of countries outside of the US or the UK. In terms of financial systems or ownership structure, Denmark can be seen as an intermediate case between Anglo-Saxon models in the US and the UK and large continental European countries such as France, Germany and Italy. In order to facilitate international comparison, the analysis follows Hall and Oriani (2006), and it is found that the relative shadow value of R&D for Denmark is larger than comparable values for France, Germany, Italy and the US, and similar to those for the UK. Though, while relative shadow values are high overall, shadow values are substantially lower for firms with high R&D intensity. The role of ownership structure is also examined and it is found, in contrast to comparable results for France and Italy, that R&D is actually valued more highly in Danish firms with a single large shareholder. It is argued that this difference may be due to greater investor protection in Denmark.