Baker and Cunningham (2006)

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1. Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare 2. Relationship between creative process and protection - what motivates creators (e.g. attribution; control; remuneration; time allocation)? 3. Harmony of interest assumption between authors and publishers (creators and producers/investors) 4. Effects of protection on industry structure (e.g. oligopolies; competition; economics of superstars; business models; technology adoption) 5. Understanding consumption/use (e.g. determinants of unlawful behaviour; user-generated content; social media)

A. Nature and Scope of exclusive rights (hyperlinking/browsing; reproduction right) B. Exceptions (distinguish innovation and public policy purposes; open-ended/closed list; commercial/non-commercial distinction) C. Mass digitisation/orphan works (non-use; extended collective licensing) D. Licensing and Business models (collecting societies; meta data; exchanges/hubs; windowing; crossborder availability) E. Fair remuneration (levies; copyright contracts) F. Enforcement (quantifying infringement; criminal sanctions; intermediary liability; graduated response; litigation and court data; commercial/non-commercial distinction; education and awareness)

Source Details

Baker and Cunningham (2006)
Title: Court decisions and equity markets: Estimating the value of copyright protection
Author(s): Baker, M., Cunningham, B.
Year: 2006
Citation: Baker, M., & Cunningham, B. (2006). Court decisions and equity markets: Estimating the value of copyright protection. Journal of Law and Economics 49(2), 567-596.
Link(s): Definitive , Open Access
Key Related Studies:
Discipline:
Linked by: Handke, Guibault and Vallbe (2015), Handke, Guibault, and Vallbe (2015), Png (2006)
About the Data
Data Description: 542 U.S. federal court decisions signed into law over the time period 1986–98.
Data Type: Secondary data
Secondary Data Sources:
Data Collection Methods:
Data Analysis Methods:
Industry(ies):
Country(ies):
Cross Country Study?: No
Comparative Study?: No
Literature review?: No
Government or policy study?: No
Time Period(s) of Collection:
  • Not stated
Funder(s):
  • Naval Academy Research Council Grant

Abstract

We construct a database of U.S. federal court decisions pertaining to copyright and changes in federal statutory copyright law and use this database to assemble indices measuring changes in the breadth of copyright protection. We combine our indices with information on excess returns to equity from a quarterly panel of firms and estimate how the breadth of copyright affects the market valuation of firm equity. A typical statute that increases copyright breadth generates an increase in a firm’s excess return to equity of 40–209 basis points, depending on the exact time frame, the size of the firm, and the importance of the change in statutory law. A typical high-court decision expanding copyright generates a 13–105 basis-point increase in excess returns. Our results are robust across 4–5-year subsamples and the size distribution of firms. Our statutory findings are strongest in the most recent portion of the sample.

Main Results of the Study

  • The authors have calculated measures of changes in copyright law derived from both statutory and case law; they find that within a standard model of firm-level equity valuation, excess returns to equity in copyright industries are significantly influenced by changes in the breadth of copyright protection.
  • The average statutory change broadening copyright appears to increase firms’ excess returns by approximately 40 basis points; if one focuses on especially important statutes, this estimate climbs to 140–70 basis points, and if one focuses on relatively larger firms over the most recent sample period, the estimate rises to 209 basis points.
  • To the authors' knowledge, this is the first evidence to suggest that the breadth of copyright law is important in determining the performance of firms in copyright industries.

Policy Implications as Stated By Author

This paper has not determined whether equity value increases because changes in the law render existing materials more valuable or because of increased incentive to create new creative works. The authors recommend therefore an analysis that discriminates between these two aspects of expanded breadth (coupled with the analysis presented in this paper) in order to help establish the optimal breadth of copyright protection.


Coverage of Study

Coverage of Fundamental Issues
Issue Included within Study
Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare
Green-tick.png
Relationship between creative process and protection - what motivates creators (e.g. attribution; control; remuneration; time allocation)?
Harmony of interest assumption between authors and publishers (creators and producers/investors)
Effects of protection on industry structure (e.g. oligopolies; competition; economics of superstars; business models; technology adoption)
Understanding consumption/use (e.g. determinants of unlawful behaviour; user-generated content; social media)
Coverage of Evidence Based Policies
Issue Included within Study
Nature and Scope of exclusive rights (hyperlinking/browsing; reproduction right)
Green-tick.png
Exceptions (distinguish innovation and public policy purposes; open-ended/closed list; commercial/non-commercial distinction)
Mass digitisation/orphan works (non-use; extended collective licensing)
Licensing and Business models (collecting societies; meta data; exchanges/hubs; windowing; crossborder availability)
Green-tick.png
Fair remuneration (levies; copyright contracts)
Enforcement (quantifying infringement; criminal sanctions; intermediary liability; graduated response; litigation and court data; commercial/non-commercial distinction; education and awareness)

Datasets

Sample size: 542
Level of aggregation: U.S. federal court decisions
Period of material under study: 1986-1988