Measuring Intangible Capital with Market Prices

78 Pages Posted: 27 Nov 2018 Last revised: 16 Nov 2020

See all articles by Michael Ewens

Michael Ewens

California Institute of Technology - Division of the Humanities and Social Sciences; National Bureau of Economic Research (NBER)

Ryan H. Peters

Tulane University - Finance & Economics

Sean Wang

Southern Methodist University

Multiple version iconThere are 3 versions of this paper

Date Written: October 31, 2020

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 (October 31, 2020). Available at SSRN: https://ssrn.com/abstract=3287437 or http://dx.doi.org/10.2139/ssrn.3287437

Michael Ewens (Contact Author)

California Institute of Technology - Division of the Humanities and Social Sciences ( email )

1200 East California Blvd.
Pasadena, CA 91125
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Ryan H. Peters

Tulane University - Finance & Economics ( email )

A.B. Freeman School of Business
7 McAlister Drive
New Orleans, LA 70118
United States

Sean Wang

Southern Methodist University ( email )

P.O. Box 750333
Dallas, TX 75275-0333
United States
2147682858 (Phone)

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