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Does the Stock Market Evaluate Intangible Assets? An empirical analysis using data of listed firms in Japan

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  • MIYAGAWA Tsutomu
  • TAKIZAWA Miho
  • EDAMURA Kazuma

Abstract

Following Corrado et al. (2009), we measure intangible assets at the listed firm level in Japan. Compared to the conventional Tobin's Q, the revised Q including intangibles is almost 1 on average, as suggested by Hall (2000 and 2001). The standard deviation of the revised Q is smaller than that of the conventional Q. Estimation results based on Bond and Cummins (2000) show that greater intangible assets increase firm value. In particular, in the IT industries, on average, Tobin's Q is higher than that in the non-IT industries, and the stock market reflects the value of intangibles in the IT industries. These results suggest that the government should adopt policies that promote investment, including intangibles in the IT industries, and change in the industry structure in Japan.

Suggested Citation

  • MIYAGAWA Tsutomu & TAKIZAWA Miho & EDAMURA Kazuma, 2013. "Does the Stock Market Evaluate Intangible Assets? An empirical analysis using data of listed firms in Japan," Discussion papers 13052, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:13052
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    References listed on IDEAS

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    Cited by:

    1. Omar Alsinglawi & Mohammad Aladwan, 2018. "The Effect of Invisible Intangibles on Volatility of Stock Prices," Modern Applied Science, Canadian Center of Science and Education, vol. 12(11), pages 290-290, November.

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