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Article
Intangible Investments and the Pricing of Corporate SGA Expenses
The Journal of Business and Economic Studies
  • Rongbing Huang, Kennesaw State University
  • Gim S. Seow, University of Cincinnati - Main Campus
  • Joe S. Shangguan, Robert Morris University
Department
Economics, Finance and Quantitative Analysis
Document Type
Article
Publication Date
10-1-2011
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.

Citation Information
Rongbing Huang, Gim S Seow, and Joe Z Shangguan. "Intangible Investments and the Pricing of Corporate SGA Expenses." The Journal of Business and Economic Studies 17.2 (2011): 47,66,97-98. Print.