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The dominance of intangible assets: consequences for enterprise management and corporate reporting

Year
2004
Secondary
https://storage.googleapis.com/public-quant/integrate/papers/The%20dominance%20of%20intangible%20assets_%20consequences%20for%20enterprise%20management%20and%20corporate%20reporting.pdf
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https://mega.co.nz/#!ueZzwY4K!j07vVECyFmtfOipQZ5MQkYppJzj8edYhHgLs_EnniN4
Abstract
1. Andrew L. Berkin 1. is the Head of Research at Bridgeway Capital Management in Houston, TX. (aberkin{at}bridgeway.com) 2. Amitabh Dugar 1. is a Research Analyst at Bridgeway Capital Management in Houston, TX. (adugar{at}bridgeway.com) 3. Jacob Pozharny 1. is the Head of International Equity at Bridgeway Capital Management in Houston, TX. (jpozharny{at}bridgeway.com) Prevalent accounting standards require the cost of internally created intangibles to be expensed, disproportionately affecting the book values of high and low intangible intensity (II) companies. We expect this to impact the performance efficacy of various factors contextually, depending on the extent to which intangible capital affects their computation. We compare return spreads for Book to Market, a measure of Value, and Momentum for companies belonging to low and high II industries and find that for Book to Market, they have declined significantly for companies in high II industries compared to spreads for companies in low II industries. We show that this decline is linked to the increasing intangible intensity of companies in high II industries. In contrast, Momentum spreads have increased for companies in high II industries. For investors who use multifactor strategies, the implication is that weighting Book to Market and Momentum according to the II of the company’s industry may be a useful technique for incorporating the effects of intangibles.
Author
Baruch Lev and Juergen H. Daum
View
https://sci-hub.st/10.1108/13683040410524694
Journal
https://www.emerald.com/insight/content/doi/10.1108/13683040410524694/full/html?fullSc=1&mbSc=1
Published
2022/05/11
Retrieved
5/11/2022, 10:44:51 PM
DOI
10.1108/13683040410524694
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