Intangible assets and market value of Japanese industries and firms

Abstract

In this study, we examined whether the market value reflects the investment in intangible assets predicted by resource-based view (RBV) in a sample of public Japanese firms and industries. In particular, we tested whether the goodness of fit between prevailing industrial setting and firm’s resource endowment is associated with market value. Our findings suggest that while some industries are more valuable than other, intangible assets are not a necessary condition. The results also indicate that while there exists a strong positive effect of R&D on Tobin’s Q the evidence on the relationship between advertising and Tobin’s Q is mixed. The results also show that firms investing higher levels of intangible assets in low intangible-settings are more valuable.