Title

Intangible Investments and the Pricing of Corporate SGA Expenses

Department

Economics, Finance, & 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.

This document is currently not available here.

Share

COinS