University of Hong Kong
NBER Working Papers and Publications
|November 2012||Comment on "Assessing China's Top-Down Securities Markets"|
in Capitalizing China, Joseph Fan and Randall Morck, editors
|June 1999||Stakes and Stars: The Effect of Intellectual Human Capital on the Level and Variability of High-Tech Firms' Market Values|
with Michael R. Darby, Lynne G. Zucker: w7201
High-tech firms are built much more on the intellectual capital of key personnel than on physical assets, and firms built around the best scientists are most likely to be successful in commercializing breakthrough technologies. As a result, such firms are expected to have higher market values than similar firms less well endowed. In this paper we develop and implement an option-pricing based technique for valuing these and similar intangible assets by examining the effect of ties to star scientists on the market value of new biotech firms. Since firms with more star ties are likely to have a greater probability per unit time of making a commercially valurable R&D breakthrough, we argue and confirm empirically that both the value of the firm and the likelihood of jumps in the value are i...
Published: Darby, Michael R., Qiao Liu and Lynne G. Zucker. "High Stakes In High Technology: High-Tech Market Values As Options," Economic Inquiry, 2004, v42(3,Jul), 351-369.