Case Examples of Utilizing the YKS Method
Ministry of Economy, Trade and Industry
The report of the research group in which our company participated, published on the website of the Ministry of Economy, Trade and Industry.
The FY2008 Industrial Technology Survey Report
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The results of data analysis targeting approximately 7,000 small and medium-sized enterprises (SMEs) have revealed that the evaluation of technological strength utilizing patent information, specifically the patent value evaluation using the YKS method, can serve as an early indicator for predicting the future growth potential and bankruptcy risk of SMEs. This finding suggests that the evaluation based on the YKS method is expected to contribute to the efforts of financial institutions and others to actively assess the technological capabilities of SMEs."
FY2008 Industrial Technology Survey Report
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The FY2008 Industrial Technology Survey Report," "Research on Corporate Venturing," highlights the situation where research and development investment in private companies does not lead to enhanced profitability and where technological assets remain unused within the organization. It emphasizes the need to strengthen Management of Technology (MOT). This report conducts the development and analysis of benchmark indicators for the 'C: check' phase of the MOT's PDCA cycle. Within this context, the YKS method is incorporated as a qualitative evaluation indicator for patent assets. As a result, it has received a certain level of recognition as an indicator contributing to the visualization of technological asset value.
The Bank of Japan
The paper utilizing our firm's patent value evaluation method is featured on the Bank of Japan's website.
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This paper discusses the relationship between default rates, which serve as an indicator of corporate creditworthiness, and the technological capabilities represented by YK values. As a result, it quantitatively demonstrates the involvement of technological capabilities, an intangible asset, in default rates, and concludes that more accurate estimations can be achieved compared to estimations based solely on financial information.
The verification results using our firm's method are featured in reports issued by the Bank of Japan.
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When providing financing to early-stage companies such as startups and ventures, it is necessary to assess the business's growth potential and risks. However, relying solely on tangible assets to perform this evaluation proves challenging. Therefore, an attempt is being made to incorporate intangible assets, such as technological capabilities using methods like the YKS approach, to evaluate a company's profitability. As a result, it has been concluded that a company's technological capabilities possess significant explanatory power for future growth rates and default rates.
Tokyo Stock Excange
On the Tokyo Stock Exchange's website, theme stocks selected using the YK value have been disclosed.
As part of the Japanese Economy Support Project, initiated by the Tokyo Stock Exchange,
Mitsubishi UFJ Morgan Stanley Securities
The report titled "Uncovering Hidden Gems using 'YK Value' as an Indicator of Technological Competitiveness" has been issued by Mitsubishi UFJ Morgan Stanley Securities on January 24th of this year. In this 27-page report, they developed a "YK Value Momentum" score that reflects the impact of technological competitiveness on the 'YK Value' and validated its effectiveness. As a result, they concluded that it is possible to efficiently identify hidden gem stocks, particularly in the case of high-risk investments in small and low-ranked stocks. If you are interested, you can view the cover
Nikkei Inc.
YKS Patent Power Information has been updated.
YKS Patent Power Information has been updated in May 2019. YKS Map is an industry map created based on the YKS Technology Industry Classification developed by Kudo & Associates.
The YKS Technology Industry Classification represents the friendly and adversarial relationships among companies at the subcategory level.
Each map features the top 10 companies (main companies) based on the YK values indicating their technological competitiveness from patents, along with the associated competing or cooperating companies (sub-companies).
Published in the Nihon Keizai Shimbun Digital Edition.
The article titled "Companies with Strong Patents: Assessing Competitiveness across 100 Fields in the New Era of Industrial Creation" has been published in the Nihon Keizai Shimbun Digital Edition.
Please refer to
Nikkei Business Publications
It was featured in the Nikkei Corporate Information, New Year 2015 issue.
It was featured in the Nikkei Corporate Information, Autumn 2015 issue.
Continuing from the New Year issue, it analyzes companies with notable patent strength that can be leveraged for investment.
Our YK value is introduced in the book titled 'Investing in Stocks: Ride the Wave of Long-Term Growth!' authored by Mr. Shingo Ide, Senior Researcher and Chief Equity Strategist at Nissay Research Institute.
The book, published by Nikkei Business Publications, features our YK value in pages 92 to 103. In the section titled 'A New Perspective on Investment Focusing on Patent Value,' the book discusses the power of YK value that can be utilized in predicting stock prices. It explains the relevance between YK value, which quantifies a company's technological strength, and stock investment, stating that it is evident that economic value-based patent technology information can be leveraged in stock investment.
The series titled 'Searching for Stocks That Soar with Patents - Kudo Patent Detective Agency' (serial article) has been published in Nikkei Money magazine
from September 2019 issue to August 2022 issue.
In this series, each time, we introduce four stocks under specific themes such as 'Energy and Environment' or 'Fiber Products.' We focus on the following:
・'Technologically Undervalued Stocks' based on QK value
・Technological Growth Stocks' based on the rate of YK value increase
*QK value is an indicator developed jointly by QUICK Corp. and Kudo & Associates. It measures the magnitude of YK value relative to market capitalization.
In the featured article of Nikkei Money May 2019 issue,
stock picks screened based on our firm's YK value and calculated QK value were published.
In the pages 42 to 47 of Nikkei Money May 2019 issue, an article titled 'Amazing ¥100,000 Stocks with Great Technologies Unearthed by Patent Firms that Have Low Stock Prices Compared to Their Patent Value' was published, focusing on our firm's patent competitiveness indicator, YK value.
Among the 12 major classifications of YKS technology industries, four categories, namely 'Urban Infrastructure,' 'Materials,' 'Transportation Equipment,' and 'Food, Medical, and Bio,' were highlighted. The article introduced six 'Technologically Undervalued Stocks' in each category, emphasizing the magnitude of YK value relative to market capitalization.
A paper on the YKS method has been published
In this paper, we investigate the relationship between the YK value and future financial indicators such as revenue and profitability, and examine the mechanism by which the YK value possesses predictive capabilities for stock returns. We first provide an overview of the YK value and then verify its relationship with future financial indicators. Additionally, we validate whether the YK value exhibits predictive power for stock returns using recent data, employing a methodology distinct from that of Mizuta, Kudo, and Kobayashi [2009].
"Modern Finance"Magazine
A paper on the YKS method has been published
The paper titled "Empirical Analysis on the Value Relevance of Patent Information in the Stock Market Using YK Value," co-authored by Mr. Ide from Nissay Research Institute and Professor Takehara from Waseda University Graduate School of Business and Management, has been published as the lead article in the journal "Modern Finance" (an academic journal with peer-reviewed articles on finance and investment jointly published by the Japanese Finance Association and MPT Forum).
The paper states, "In this study, we conducted an analysis using not only the number of patents granted and the number of citations but also an indicator of patent quality that focuses on exclusive and proprietary technology utilization rights. As a result, we confirmed a statistically significant positive correlation between patent information and firm value and profitability."
"Securities Analyst Journal" magazine
A paper on the YKS method has been published
The Securities Analyst Journal (October 2016 issue, pp. 68-77) featured a co-authored article by Mr. Ide, Chief Equity Strategist at Nissay Research Institute, and Professor Takehara from the Waseda University Graduate School of Business Administration.
The article concludes that the acquisition of technological competitiveness measured by the YK value improves sales and profit margins, ultimately leading to an increase in Return on Equity (ROE).
This paper provides the first numerical and objective evidence that the acquisition of technological competitiveness, including intellectual property activities, significantly influences the profitability and growth of companies.
We consider these research findings to be valuable for our firm, as they contribute to enhancing the presence of our intellectual property department and related stakeholders within the company.
Please refer to
If you would like to access the full text, please purchase it
The article titled 'The Impact of Trademark Rights Information on Stock Value: An Analysis Using Long-Term Panel Data,' co-authored by Mr. Ide, Senior Researcher at Nissay Research Institute, and Professor Takehara from Waseda University Graduate School of Business and Management, has been published in the January 2020 issue (Vol. 58, No. 1, pp. 81-90) of the Securities Analyst Journal.
The research paper utilizes the trademark value evaluation index called "TK value" (developed by our firm) to examine the value relevance of trademark rights information.
As trademark rights exhibit a negative correlation with a company's profitability, growth potential, and risk premium, it has been confirmed that the positive correlation with the market capitalization of stocks arises from the reduction in the risk premium outweighing the decline in profitability and growth potential.
As a result, it has been observed that trademark rights play a role in signaling a company's risk information to the market and, consequently, in gaining consumer trust and acquiring brand equity.
Please refer to
If you would like to access the full text, please purchase it
In the May 2021 issue (Volume 59, Issue 5) of the Securities Analyst Journal, an article titled "The Impact of Patents and Trademarks on Firm Value: Examining the Interaction Effect of Patents and Trademarks" was published. The article was co-authored by Mr.Shingo Ide, Chief Equity Strategist at Nissay Research Institute, and Hitoshi Takehara, Professor at Waseda University's Graduate School of Business and Management.
The findings of this paper represent the world's first empirical analysis confirming how both patent rights information (measured by the YK value, a patent technological strength indicator developed by our institute) and trademark rights information (measured by the TK value, a trademark value evaluation indicator also developed by our institute) impact firm value.
The paper confirms that both patent rights and trademark rights contribute to increasing firm value, and their interaction is found to be statistically significant, specifically within certain groups of companies.
Please refer to
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Unauthorized reproduction or replication of content from the Japan Securities Analysts Association is strictly prohibited.
DIAMOND, INC.
The ranking utilizing our firm's patent valuation methodology (YKS method) was featured in the special article of the "Weekly Diamond" magazine, released on April 13, 2009.
Ernst & Young
A paper on the YKS method has been published
The paper titled"Japanese patent index and stock performance" utilizing the YK value, authored by Professor Takao Kobayashi from Aoyama Gakuin University Graduate School, Mr. Yasuhiro Iwanaga from Sumitomo Mitsui Trust Bank, and Mr. Hideaki Kudo from Nomura Asset Management Co., Ltd., has been published in the English journal "The Journal of Financial Perspectives" (pages 151-162 in the magazine).
In this paper, we focus on an evaluation index using the YKS method as a unique Japanese indicator, rather than the patent valuation index advocated in the United States.
Based on that, we clarify the relationship between a company's performance and the technological competitiveness indicated by this index.
Specifically, we discuss how this index can predict stock prices. According to our analysis, by using 1) the patent value evaluation index, 2) research and development investment, and 3) a simulation of stock price prediction using both 1) and 2), we found that 3) demonstrated the highest predictive power and achieved the best performance, with an average annual return reaching as high as 11.5%.
"Management and Financial Research" magazine
The paper utilizing YK value has been published
The paper titled "Technological Competitiveness and Financial Strategy of Japanese Companies: An Analysis Using YK Value and DuPont System" by Mr. Ide from Nissay Research Institute and Professor Takehara from Waseda University Graduate School of Business and Finance was published in the academic journal "Keiei Zaimu Kenkyu" (Journal of Management and Finance Research), a publication of the Japan Society for Management and Finance Studies, in its combined December 2017 issue, Volume 37, Numbers 1 and 2, which focuses on finance research.
In this paper, it is stated that the analysis using the DuPont system revealed a positive correlation between a company's technological competitiveness and its return on equity (ROE). Furthermore, it was found that companies with strong technological competitiveness exhibit a conservative approach towards the use of financial leverage.
In this study, in addition to conventional measures, the YK value developed by our institution is used as a numerical indicator of a company's technological competitiveness.
Please refer to
JAFEE
Presented a Lecture at JAFEE
We delivered a lecture titled “Analysis of Patent Value Weighted Portfolio Using the YKS Method” (presented by Takanobu Mizuta of Sparks Asset Management, Ichiro Kudo, and Kobayashi of our firm) at the 32nd Winter Conference of the Japan Finance Association (JAFEE). The presentation materials published in the conference journal can be found here.
In this paper, we proposed a portfolio management approach weighted by patent value. This portfolio has significantly outperformed the market capitalization weighted portfolio by an annual rate of 6.1%. Many investors are believed to overlook the fact that industries with overweight positions in YK values hold valuable patents, which we consider to be a key factor contributing to the significant outperformance.
English Papers
English Papers related YK values
Suto, M. and Takehara, H. (2022), “Employee-oriented corporate social responsibility, innovation, and firm value," Corporate Social Responsibility and Environmental Management, 29(4), 765–778.
Suto, M. and Takehara, H.(2021), “Impact of corporate social responsibility intensity on firm-specific risk and innovation: Evidence from Japan,” Social Responsibility Journal, 18(3), 484-500.
Kubota, K. and Takehara, H.(2019),“Firm-level innovation by Japanese family firms: Empirical analysis using multidimensional innovation measures,” Pacific-Basin Finance Journal, 57.
Suto, M. and Takehara, H. (2018),“Relationship between technological innovation, corporate social performance, and corporate financial performance,” in: Corporate Social Responsibility and Corporate Finance in Japan. Advances in Japanese Business and Economics. Springer, Singapore.