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Intangible Investment and Market Valuation
Author(s) -
Piekkola Hannu
Publication year - 2016
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/roiw.12149
Subject(s) - valuation (finance) , economics , investment (military) , physical capital , capital intensity , market value , book value , business , labour economics , monetary economics , finance , human capital , market economy , earnings , politics , political science , law
This study derives performance‐ and expenditure‐based estimates of intangible capital and measures the extent to which intangible capital is captured by the equity market measures of firm value. Intangible capital is evaluated using occupational information available in the Finnish linked employer–employee data for the 1997–2011 period. The performance‐based organizational investment in value added is approximately 3 percent; R & D and ICT investment shares are lower, at 1.5 percent, and all are clustered in intangible‐intensive sectors that represent 40 percent of the private sector. Expenditure‐based organizational capital also exists in clusters other than that intensively investing in managerial and marketing effort, and performance‐based R & D capital is concentrated in the cluster with intensive R & D activity; both increase the market value of firms beyond the level that can be explained by standard economic analysis.