Measuring Intangible Capital with Market Prices

63 Pages Posted: 27 Nov 2018 Last revised: 23 Jun 2021

See all articles by Michael Ewens

Michael Ewens

Columbia Business School; National Bureau of Economic Research (NBER)

Ryan H. Peters

Tulane University - Finance & Economics

Sean Wang

Southern Methodist University (SMU) - Accounting Department

Multiple version iconThere are 2 versions of this paper

Date Written: June 22, 2021

Abstract

Current standards prohibit the capitalization of internally created intangibles, resulting in a downward bias of reported assets. We estimate a capitalization model using market prices of intangibles to estimate the parameters of the capital accumulation process. Two settings provide intangible asset values: publicly traded equity prices and exit prices. We use these parameters to estimate intangible capital stocks and subject them to an extensive set of validation tests that compare them with stocks estimated using existing parameters. Intangible stocks developed from exit price parameters outperform both stocks developed by publicly traded parameters and those stocks developed with existing estimates.

Keywords: Intangible capital, organization capital, depreciation, knowledge capital, R&D, acquisitions

JEL Classification: G30, G32, G34,O34

Suggested Citation

Ewens, Michael and Peters, Ryan H. and Wang, Sean, Measuring Intangible Capital with Market Prices (June 22, 2021). Available at SSRN: https://ssrn.com/abstract=3287437 or http://dx.doi.org/10.2139/ssrn.3287437

Michael Ewens (Contact Author)

Columbia Business School ( email )

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National Bureau of Economic Research (NBER) ( email )

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Ryan H. Peters

Tulane University - Finance & Economics ( email )

A.B. Freeman School of Business
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Sean Wang

Southern Methodist University (SMU) - Accounting Department ( email )

United States
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