Intangible Value / Andrea L. Eisfeldt, Edward Kim, Dimitris Papanikolaou.

Format:

Book

Author/Creator:

Eisfeldt, Andrea L.

Contributor:

National Bureau of Economic Research.

Kim, Edward.

Papanikolaou, Dimitris.

Series:

Working Paper Series (National Bureau of Economic Research) no. w28056.

NBER working paper series no. w28056

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

Intangible assets are absent from traditional measures of firm value despite their growing importance in firms' capital stocks. We propose a simple improvement to the classic Fama and French (1992, 1993) value factor that incorporates intangibles and addresses differences in accounting practices across industries. Our intangible value factor prices assets as well as or better than the traditional value factor but yields substantially higher returns. This outperformance holds over the entire sample period, including in more recent decades during which value has underperformed. We show that the intangible value factor sorts more effectively within industries on productivity, profitability, financial soundness, and on other valuation ratios such as price-to-earnings.

Notes:

Print version record

November 2020.