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 margina...

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Published in:The Journal of finance (New York) 2023-08, Vol.78 (4), p.1873-1916
Main Authors: CROUZET, NICOLAS, EBERLY, JANICE
Format: Article
Language:English
Subjects:
Frame analysis
Intangible assets
Rents
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cited_by cdi_FETCH-LOGICAL-c3421-1edc1b993427aa20df21083b08e8b386aa5d31b5cebe2edea4eae662f7fb5de23
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description 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_str_mv 10.1111/jofi.13231
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source International Bibliography of the Social Sciences (IBSS); Wiley-Blackwell Read & Publish Collection
subjects Frame analysis
Intangible assets
Rents
title Rents and Intangible Capital: A Q+ Framework
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