We decompose the difference between a firm’s market and book values into two components: intangible assets that can be created by competing firms through SG&A/R&D expenditures, and the residual denoted as franchise value (FV). The estimated parameters in the model for creating intangible...

This study investigates the dynamic effect of the change in aggregate Tobin's q ratio (TBQ) on the percentage change in the S&P 500 price-to-earnings ratio (PE). Based on the analysis of the quarterly market level data from 1951Q4 to 2012Q4, the results show that PE significantly jumps...