Following Corrado et al. (2009), we measure intangible assets at the listed firm level in Japan.
Compared to the conventional Tobin’s Q, the revised Q including intangibles is almost 1 on
average, as suggested by Hall (2000 and 2001). The standard deviation of the revised Q is smaller
than that of the conventional Q. Estimation results based on Bond and Cummins (2000) show that
greater intangible assets increase firm value. In particular, in the IT industries, Tobin’s Q is higher
than that in the non-IT industries on average and the stock market reflects intangibles in the IT
industries. These results suggest that the government should adopt policies that promote
investment including intangibles in the IT industries and industry structure in Japan.
Keywords: Tobin’s Q, Intangible asset, IT industries, price cost margin, external finance
dependence
JEL classifications: E22, G31, G32, L25, O30
