The Valuation of Intellectual Capital
64 Pages Posted: 27 May 2003
Date Written: March 10, 2003
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.
Keywords: Valuation, Intellectual Capital, Residual Income, Resource-based view
JEL Classification: M4, G3
Suggested Citation: Suggested Citation