A New Approach to the Valuation of Intangible Capital

Jason G. Cummins

in Measuring Capital in the New Economy

Published by University of Chicago Press

Published in print October 2005 | ISBN: 9780226116129
Published online February 2013 | e-ISBN: 9780226116174 | DOI:
A New Approach to the Valuation of Intangible Capital

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This chapter discusses conceptual and measurement issues about the market valuation approach to measuring intangible capital that has appeared in the recent literature. It explains how intangible capital is measured in the market valuation approach and proposes to consider intangibles within an adjustment-cost framework. The application of the proposed method in earnings forecasts reveals that this approach finds a substantial, but much smaller, valuation of intangible capital. It also provides a different perspective about what intangibles are and how researchers can estimate their return.

Keywords: market valuation approach; intangible capital; adjustment-cost framework; earnings forecast; estimate of return

Chapter.  11678 words.  Illustrated.

Subjects: Econometrics and Mathematical Economics

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