Inferring the Value of Intangible Assets

54 Pages Posted: 19 Mar 2011 Last revised: 4 Sep 2012

See all articles by Georgios Angelopoulos

Georgios Angelopoulos

HSBC

Daniel Giamouridis

Bank of America - Bank of America Merrill Lynch; City University London - Cass Business School - Faculty of Finance; EDHEC Risk Institute

Orestes Vlismas

Athens University of Economics and Business - Department of Accounting and Finance

Date Written: March 1, 2012

Abstract

This paper develops a novel framework for characterizing firms with respect to their intangible assets and investigates their impact on market valuations and operating performance. Our framework is based on a contemporary theoretical Knowledge Management concept, namely Intellectual Capital. We show how to quantify a firm’s Intellectual Capital based on publicly and widely available financials. When we characterize firms with respect to our measure, we find that the most Intellectual Capital intensive firms outperform their least Intellectual Capital intensive firms even two years after they have been characterized. Our measure for Intellectual Capital is also strongly associated with future operating performance. We conclude that investors fail to incorporate intangible assets related information in market valuations and that this failure is more pronounced when a firm possesses broader intangible value.

Keywords: M41, J24, G12, G14

JEL Classification: Intellectual Capital, Intangible Assets, Financial Statement Analysis, Mispricing

Suggested Citation

Angelopoulos, Georgios and Giamouridis, Daniel and Vlismas, Orestes, Inferring the Value of Intangible Assets (March 1, 2012). Available at SSRN: https://ssrn.com/abstract=1786285 or http://dx.doi.org/10.2139/ssrn.1786285

Georgios Angelopoulos

HSBC

London
United Kingdom

Daniel Giamouridis (Contact Author)

Bank of America - Bank of America Merrill Lynch ( email )

United Kingdom

City University London - Cass Business School - Faculty of Finance ( email )

London, EC2Y 8HB
Great Britain

EDHEC Risk Institute ( email )

Lille
France

Orestes Vlismas

Athens University of Economics and Business - Department of Accounting and Finance ( email )

76 Patission Street
GR-104 34 Athens, Athens
Greece

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