Department
Economics, Finance and Quantitative Analysis
Document Type
Article
Publication Date
Fall 2011
Abstract
This study examined whether the market fully prices the reported Selling, General, and Administrative (SGA) expenses when this item includes an intangible investment component. For a sample of intangible investment-intensive firms, we showed that their SGA expenses benefit future operating performances. Evidence suggests some degree of market inefficiency in the pricing of SGA expenses and the intangible investment component. Furthermore, the financial analysts do not appear to appreciate fully the future benefits of the component in their earnings forecasts. Finally, the pertinent disclosures in firms’ annual reports are so inadequate as to attenuate the market mispricing, suggesting a significant room for future improvement.
Journal Title
The Journal of Business and Economic Studies
Journal ISSN
1063-343X
Volume
17
Issue
2
Included in
Accounting Commons, Corporate Finance Commons, Economics Commons, Finance and Financial Management Commons