A relationship between technology indicators and stock market performance

One of the main objectives of technology analyses is to understand how investing in technological innovation can have commercial benefits. However, empirical studies of the relationship between investments in technology and subsequent economic performance are relatively scarce. This paper provides such an analysis by demonstrating how quantitative R&D and technology indicators may be used to forecast company stock price performance. The purpose of the analysis is to utilize a unique patent database, and the science and technology indicators developed from the data therein, to explore this issue of technological competence and economic performance. The underlying concept behind this study is that the quality of a company's technology is reflected in its patent portfolio. Previous research has shown that a company with a large percentage of influential parents is much more likely to be technologically successful than a company with weaker patents. The analysis presented here reveals that such a company is also more likely to be successful in capital markets.