Technological innovation and stock market returns in Europe

Abstract

This study examines the predictive power of aggregate level patent count data on excess stock market returns in Europe. In contrast with the findings of Hsu (2009), there persists no significant predictive abilities in patent shocks nor patent growth against market returns in Europe or in individual European sample countries. The findings might be explained by patent application data not consistently reflecting technological innovation on the aggregate level, or that there persists predictability, but the effects on market returns takes place at highly unpredictable timelines. The results presented in my study do not provide any evidence towards aggregate patent application count data having a predictive power for market returns in Europe.