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| Type | Bachelor's Thesis |
| Scope | Discipline-based scholarship |
| Title | Intangible Assets – Looking for Alpha |
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| Institution | University of Zurich |
| Faculty | Faculty of Business, Economics and Informatics |
| Number of Pages | 52 |
| Date | 2019 |
| Abstract Text | This thesis examines whether the capital market fully values company’s intangible capital. Current U.S. accounting standards do not aloud internally-created intangible assets to be capitalized. For this reason, I compute a firm’s intangible capital by activating past R&D and SG&A spending. Based on the measure of intangible intensity, I construct a long-short portfolio strategy of all U.S. firms in the Compustat data base. The resulting portfolio analysis shows a marginally significant out-performance in future excess returns of high intangible-intensive firms over those of low intangible-intensive firms over the period from 1998 through 2017. Divided into two separate periods, the panel from 2008 to 2017 contains high intangible-intensive companies that generated risk-adjusted returns that exceeded those of low intangible-intense companies with high significance (alpha of 0.86 % per month of the long-short portfolio significant on the 1 % level). Overall, the thesis provides evidence that the capital market still misprices the value of stocks with high intangible capital. The higher future returns of high-intangible firms underline the increased importance of intangible capital for a firm’s valuation which investors fail to anticipate. To take full advantage of the benefits of intangible investments, not only investors, but also corporate managers need to be properly sensibilised in the subject of intangible capital. |
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