Trademarks are an important determinant of the economic value created by firms. A trademark is a word, symbol, or other signifier used to distinguish a good or service produced by one firm from the goods or services of other firms. Firms use trademarks to differentiate their products from those of other firms, reduce search costs for consumers, and to generate consumer loyalty through advertising, all of which may affect their product market performance and therefore their financial performance. However, despite the importance of trademarks for the economic activities of firms, there is a relatively little evidence on the role played by trademarks in entrepreneurial finance: i.e., in the financing, performance, and valuation of young firms at various stages in their life. One exception is Block, De Vries, Schumann, and Sandner (2014), who investigate the relation between the number of trademark applications by VC-backed start-up firms and the valuations of these start-up firms by VCs.
Posted by Thomas J. Chemmanur (Boston College), Harshit Rajaiya (Boston College), Xuan Tian (Tsinghua University), Qianqian Yu (Lehigh University), on Wednesday, October 24, 2018
Editor's Note: Thomas Chemmanur is a Professor at the Boston College Carroll School of Management. This post is based on a recent paper by Professor Chemmanur; Harshit Rajaiya, Ph.D. candidate at the Boston College Carroll School of Management; Xuan Tian, JD Capital Chair Professor of Finance at Tsinghua University PBC School of Finance; and Qianqian Yu, Professor of Finance at Lehigh University.