Inferring the Value of Intangible Assets

This paper examines whether financial statement analysis can be effective in inferring the intangible value of firms.

Author(s):

Georgios Angelopoulos

Athens University of Economics and Business

Daniel Giamouridis

Research Associate, EDHEC-Risk Institute

Orestes Vlismas

Athens University of Economics and Business

We measure the intangible value by means of a firm’s Intellectual Capital, which encompasses the intangible assets and the organizational knowledge of a firm that are not reported directly by financial statements. Our analysis decomposes Intellectual Capital into its three primary components: Human Capital, Structural Capital, and Relational Capital. We study each component separately and create an aggregate index, the IC_SCORE, which classifies firms relative to their Intellectual Capital. We find that the IC_SCORE is a significant predictor of the future cross-section of equity returns. Firms with high Intellectual Capital outperform firms with low Intellectual Capital for up to two years in the future. A longshort strategy based on the IC_SCORE earns significant excess returns of the magnitude of over a minimum of 0.84 percent per month. The results are robust for alternative risk adjustment procedures and in partitions of size and book-to-market.
Pdf
Inferring the Value of Intangible Assets...
(-1.00 B)
Type: Working paper
Date: le 05/03/2012
Extra information : For more information, please contact EDHEC Research and Development Department [ research@drd.edhec.edu ]
Research Cluster : Finance

See Also

[Student Experience] Immersion trip - Welcome to San Francisco!
News
- 25-05-2018
Immersion Trip abroad: focus on EDHEC students' experience Silicon Valley is well-known...
News
- 25-05-2018
EDHEC-Risk Institute is pleased to announce that Kati Eriksson, Head of Investments, Aalto University Endowment have joined its international advisory board, which brings together...
The EDHEC PhD in Finance Programme adds two new alumni
News
- 21-05-2018
On 17 May 2017, two EDHEC PhD in Finance candidates (executive track), Stefano Dova and...
EDHEC Business School hosts the Family Business Extension  of the 38th Strategic Management Society (SMS) Annual Conference
News
- 18-05-2018
  Like in previous years, the 2018 Family Business Extension will bring together a...