Date of Award
Spring 2022
Degree Name
Bachelor of Science (BS)
Advisor(s)
Kelly Ulto
Abstract
This study investigates the relationship between intangible assets and stock prices within the technology sector, addressing a critical gap in financial accounting standards and investment decision-making. Despite the growing predominance of intangible assets, which comprise 90% of S&P 500 assets, current accounting practices under IAS 38 lead to substantial challenges in valuing such assets. This results in significant discrepancies between a company's book and market values, which can mislead investors about the true financial health of a company. The research explores whether the perception of a company's intangible assets, through metrics such as Customer Lifetime Value (CIV), Environmental, Social, and Governance (ESG) scores, and disclosed intangibles, could inform an investor’s understanding of a firm's competitive position and potential market volatility. The study found no significant correlation between these intangible asset metrics and stock prices, suggesting that current financial disclosures may not adequately reflect the value of intangible assets. The implications of these findings are profound, indicating a need for improved accounting standards and investor practices concerning intangible assets. This could potentially lead to more accurate company valuations and better-informed investment decisions. The study concludes with a call for more comprehensive disclosure of intangible assets, aligned with the growing importance of ESG factors and the increasingly knowledge-based economy, which could enhance the transparency and reliability of financial statements.
Recommended Citation
Underwood, Hannah, ""Intangible Asset Valuation: Can metrics relating to intangible assets help explain stock returns in the technology industry? "" (2022). Gabelli School of Business Honors Thesis Collection. 28.
https://research.library.fordham.edu/gabelli_thesis/28
