Critical Finance Review > Vol 11 > Issue 2

Intangible Value

Andrea L. Eisfeldt, UCLA Anderson School of Management and NBER, USA, , Edward T. Kim, UCLA Anderson School of Management, USA, , Dimitris Papanikolaou, Kellogg School of Management and NBER, USA,
Suggested Citation
Andrea L. Eisfeldt, Edward T. Kim and Dimitris Papanikolaou (2022), "Intangible Value", Critical Finance Review: Vol. 11: No. 2, pp 299-332.

Publication Date: 03 May 2022
© 2022 Andrea L. Eisfeldt et al.
Value investingValue factorIntangible assetsIntangible capital


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In this article:
1. Introduction 
2. The Intangible Value Factor (HMLINT) 
3. Intangible vs. Traditional Value: Pricing Errors 
4. Intangible vs. Traditional Value: Performance 
5. How do Intangible and Traditional Value Differ? 
6. Conclusion 


Intangible assets are absent from traditional measures of firm value despite their growing importance in firms’ capital stocks. We propose a simple improvement to the classic Fama and French (1992, 1993) value factor that incorporates intangibles and addresses differences in accounting practices across industries. Our intangible value factor prices assets as well as or better than the traditional value factor but yields substantially higher returns. This outperformance holds over the entire sample period, including in more recent decades during which value has underperformed. We show that the intangible value factor sorts more effectively within industries on productivity, profitability, financial soundness, and on other valuation ratios such as price-to-earnings.