Southern Methodist University
6425 Boaz Lane
Dallas, TX 75205
Institutional Affiliation: Southern Methodist University
NBER Working Papers and Publications
|June 2019||Measuring Intangible Capital with Market Prices|
with Michael Ewens, Ryan H. Peters: w25960
Existing standards prohibit disclosures of internally created intangible capital to firm balance sheets, resulting in a downward bias of reported assets. To characterize off-balance sheet intangible assets, we use transaction prices to estimate this missing intangible capital. On average, our new measure of intangible capital is 10% smaller than prior estimates, while varying more by industry. These estimates better explain market values, increase HML portfolio returns, act as a better proxy for human capital and brand rankings, and exhibit a strong association with patent values.