This paper proposes a new multiple, based on intellectual capital, as a new tool for relative valuation of a firm. The intellectual capital multiple (ICM), also disaggregated in three multiples, based on the intellectual capital components (human, structural and relational capital), can be added to the traditional financial-based multiples (e.g., price/earnings, EV/EBITDA, EV/sales, etc.) to improve the techniques of valuation based on the so-called comparables. An empirical analysis on a sample of firms listed in the Italian Stock Exchange has been carried out to validate the new method, by comparing the intellectual capital-based multiples with the traditional financial-based enterprise multiples. Findings show that, especially in certain sectors mainly characterised by a high use of intellectual capital resources (software and telecommunications), ICMs can be considered as valid and reliable. The ICMs can lead researchers and practitioners towards discovering a new ‘intangible’ valuation tool to be placed alongside ‘tangible’ valuation methods.

The Intellectual Capital Multiple: a new tool for Relative Valuation of a firm - theoretical presentation and empirical application to Italian companies

IAZZOLINO, Gianpaolo;
2014

Abstract

This paper proposes a new multiple, based on intellectual capital, as a new tool for relative valuation of a firm. The intellectual capital multiple (ICM), also disaggregated in three multiples, based on the intellectual capital components (human, structural and relational capital), can be added to the traditional financial-based multiples (e.g., price/earnings, EV/EBITDA, EV/sales, etc.) to improve the techniques of valuation based on the so-called comparables. An empirical analysis on a sample of firms listed in the Italian Stock Exchange has been carried out to validate the new method, by comparing the intellectual capital-based multiples with the traditional financial-based enterprise multiples. Findings show that, especially in certain sectors mainly characterised by a high use of intellectual capital resources (software and telecommunications), ICMs can be considered as valid and reliable. The ICMs can lead researchers and practitioners towards discovering a new ‘intangible’ valuation tool to be placed alongside ‘tangible’ valuation methods.
Intellectual Capital; Multiples; Relative Valuation; Firm value; Italian companies
File in questo prodotto:
Non ci sono file associati a questo prodotto.

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/20.500.11770/142252
 Attenzione

Attenzione! I dati visualizzati non sono stati sottoposti a validazione da parte dell'ateneo

Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 1
  • ???jsp.display-item.citation.isi??? ND
social impact