Measuring Intangible Capital with Market Prices

72 Pages Posted: 20 Jun 2019 Last revised: 8 Dec 2021

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 2 versions of this paper

Date Written: June 2019

Abstract

Existing standards prohibit disclosures of internally created intangible capital to firm balance sheets, resulting in a downward bias of reported assets. To characterize off-balance sheet intangible assets, we use transaction prices to estimate this missing intangible capital. On average, our new measure of intangible capital is 10% smaller than prior estimates, while varying more by industry. These estimates better explain market values, increase HML portfolio returns, act as a better proxy for human capital and brand rankings, and exhibit a strong association with patent values.

Suggested Citation

Ewens, Michael and Peters, Ryan H. and Wang, Sean, Measuring Intangible Capital with Market Prices (June 2019). NBER Working Paper No. w25960, Available at SSRN: https://ssrn.com/abstract=3406478

Michael Ewens (Contact Author)

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

1200 East California Blvd.
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National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138
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Ryan H. Peters

Tulane University - Finance & Economics ( email )

A.B. Freeman School of Business
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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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