The relative stock market valuation of the intangible asset created by R&D; investment in U.S. manufacturing firms has fallen from rough equality with ordinary tangible assets during the 1973-1982 period to about twenty to thirty percent of ordinary capital during the 1986-1990 period. At the same time, the relative market valuation of advertising expenditure has risen to parity with R&D; spending. This finding is based on a large comprehensive panel of about 2500 U.S. industrial corporations, covering eighty to ninety percent of industrial R&D; performed by U.S. firms and is robust to industry controls, sample selection, and various specification tests. Possible explanations for the finding are discussed, but definitive answers await future research.
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Paper provided by University of California at Berkeley in its series Economics Working Papers with number
93-207.
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