The Valuation of Intellectual Capital

Abstract:     
This paper studies the value relevance of Intellectual Capital by comparing a set of different valuation models. The empirical analysis covers 300 large European companies from 1990 to 2001. Drawing on the Ohlson (1995) and Feltham-Ohlson (1995) model, I define and test the value relevance of an Intellectual Capital earnings measure, providing evidence for the superior explanatory power of this metric compared to other income measures. I also find evidence for the superior explanatory power of a valuation function, based on IC earnings and operating earnings.

Number of Pages in PDF File: 64

Keywords: Valuation, Intellectual Capital, Residual Income, Resource-based view

JEL Classification: M4, G3

working papers series