Equity Investing in the Age of Intangibles

Financial Analysts Journal, Forthcoming

51 Pages Posted: 24 Feb 2021

See all articles by Amitabh Dugar

Amitabh Dugar

Bridgeway Capital Management

Jacob Pozharny

Bridgeway Capital Management

Date Written: December 30, 2020

Abstract

Expenditures on creation of intangible capital have increased but accounting standards have not kept pace. We investigate whether this has affected the value relevance of book value and earnings. We construct a composite measure of intangible intensity based on intangible assets capitalized on the balance sheet, research and development expenditures, and sales, general & administrative expenditures to classify industries by intangible intensity. We show that the value relevance of book value and earnings has declined for high intangible intensity companies in USA and abroad, but for the low intangible intensity group it has remained stable in USA and increased internationally.

JEL Classification: G11, G12, G14, G15, G23, G32, M40, M41

Suggested Citation

Dugar, Amitabh and Pozharny, Jacob, Equity Investing in the Age of Intangibles (December 30, 2020). Financial Analysts Journal, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3770088 or http://dx.doi.org/10.2139/ssrn.3770088

Amitabh Dugar (Contact Author)

Bridgeway Capital Management ( email )

20 Greenway Plaza
Suite 450
Houston, TX 77046
United States
(832) 204-8224 (Phone)

Jacob Pozharny

Bridgeway Capital Management ( email )

20 Greenway Plaza
Suite 450
Houston, TX 77046
United States
(832) 204-8163 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
159
Abstract Views
663
rank
223,940
PlumX Metrics