Journal of Finance Vol. 78 No. 4 2023
Rents and Intangible Capital: A Q+ Framework
Abstract
In recent years, U.S. investment has been lackluster, despite rising valuations. Key explanations include growing rents and growing intangibles. We propose and estimate a framework to quantify their roles. The gap between valuations—reflected in average Q —and investment—reflected in marginal q —can be decomposed into three terms: the value of installed intangibles; rents generated by physical capital; and an interaction term, measuring rents generated by intangibles. The intangible related terms contribute significantly to the gap, particularly in fast‐growing sectors. Our findings suggest care in a pure‐rents interpretation, given the rising role of intangibles.
- DOI
- 10.1111/jofi.13231
- Volume
- 78
- Issue
- 4
- Pages
- 1873-1916
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref