Topic: A Simple Approach to Valuing Intangibles and Rents

Speaker: ZENG Junkai, The Chinese University of Hong Kong

Time: March 7, 2025, 10:00

Venue: EMS 119

Abstract:

We decompose the gap between a firm’s market and book values into capitalized-intangible-assets and a residual, consisting of value of capacity-adjustment-costs, economic-rents and potential mispricing. Our estimated parameter-values for capitalizing expenditures creating intangible-assets are consistent with values reported in the literature, even though we use a different approach. Firms with higher residuals have higher profitability and markups, lower labor share, face fewer product market threats, exhibit less sensitivity of investment to traditional as well as intangibles-adjusted Tobin’s Q, and benefited more from globalization during this century. This is consistent with there being a significant ex post rents-component in the residual.

Guest Bio:

ZENG Junkai, Associate Professor of Business at The Chinese University of Hong Kong (CUHK), previously served as a Financial Economist at the Federal Reserve Bank of Richmond and as an Assistant Professor at the University of Kansas School of Business. Professor Kang's research spans knowledge spillovers, asset pricing, information disclosure, innovation, corporate finance, and behavioral economics. His work has been published in leading academic journals, including The Journal of Finance, Journal of Accounting and Economics, Review of Financial Studies, The Accounting Review, Management Science, Journal of Financial and Quantitative Analysis, Contemporary Accounting Research, and Journal of Economics and Management Strategy. Currently, he serves on the editorial board of Accounting and Business Research.