wagesandsalariespaidtotheresearchers,technicians,and
othercreativeworkerswhogeneratetheseintangibleassets;
andtheimprovementinoperatingmarginsthatheattributes
to improvements to intangible factors.
1 Withallthreeapproaches,heestimatedtheinvestmentsin
intangibleassetstobeinexcessof$1trillionin 2000 andthe
capitalizedvalueoftheseintangibleassetstobeinexcessof
$6 trillion in the same year.
BaruchLevhasarguedpersuasivelythatthewayinwhich
accountantsdealwithintangiblesisneitherconservativenor
informative.
2 ExpensingR&D,forinstance,doesunderstateearningsfor
high-growth companies but it overstates earnings for
low-growthfirms.InapaperwithPaulZarowin,hepresents
evidence that earnings at U.S. firms have become less
correlated with stock prices, and he attributes this
phenomenon to the failure to account for intangible assets.
3
Ifaccountantshavedoneapoorjobofassessingthevalueof
intangibleassets,havevaluationanalystsdonemuchbetter?
Giventhatwedrawsomuchoftheinformationthatweusein
valuationfromaccountingstatements,itcanbearguedthat
thevaluationofintangibleassetshassufferedfrommanyof
thesamelimitationsastheaccountingmeasures.Infact,the
pressure on accountants to better reflect the value of
intangibleassetslikebrandnameonfinancialstatementshas
providedanimpetustovaluationanalyststotakeacloserlook
at how they have valued or failed to value these same assets.
INDEPENDENT AND CASH-FLOW-GENERATING
INTANGIBLE ASSETS