IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/30829.html
   My bibliography  Save this paper

Franchise Value, Intangibles, and Tobin’s Q

Author

Listed:
  • Wan-Chien Chiu
  • Ravi Jagannathan
  • Kevin Tseng

Abstract

We decompose the difference between a firm’s market and book values into two components: intangible assets that can be created by competing firms through SG&A/R&D expenditures, and the residual denoted as franchise value (FV). The estimated parameters in the model for creating intangible assets by capitalizing R&D/SG&A expenditures vary significantly across industries. Consistent with FV being a measure of economic rents and quasi-rents, ceteris paribus, higher FV firms face fewer product market threats, have higher markups, and their investments are less sensitive to their total Tobin’s Q. In contrast, firms with higher capitalized intangible assets, face higher product market threats.

Suggested Citation

  • Wan-Chien Chiu & Ravi Jagannathan & Kevin Tseng, 2023. "Franchise Value, Intangibles, and Tobin’s Q," NBER Working Papers 30829, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:30829
    Note: AP
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w30829.pdf
    Download Restriction: no
    ---><---

    More about this item

    JEL classification:

    • G0 - Financial Economics - - General
    • G00 - Financial Economics - - General - - - General
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:30829. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.