Goodwill Capital

Goodwill Capital The concept of goodwill or brand capital is commonly employed by analysts in business and marketing to measure the asset value of a company name or a brand name, and consequently among accountants and business analysts, but is seldom used by economists. The purpose of this article is to begin to develop the concept of goodwill capital by presenting an analysis of what it is and some estimates of its likely magnitudes. We define goodwill capital, like the capital arising from R&D and advertising, as a form of intangible asset, albeit one which cannot be readily related to past investments in R&D, advertising, and capital equipment. We compute estimates of goodwill capital by deducting measures of these other three forms of capital from a firm's market value. For many companies, goodwill capital turns out to be the largest of its four capital stocks. Roughly half of our estimates of goodwill capital turn out to be negative. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Small Business Economics Springer Journals
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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2002 by Kluwer Academic Publishers
Subject
Business and Management; Management; Microeconomics; Entrepreneurship; Industrial Organization
ISSN
0921-898X
eISSN
1573-0913
D.O.I.
10.1023/A:1019637725489
Publisher site
See Article on Publisher Site

Abstract

The concept of goodwill or brand capital is commonly employed by analysts in business and marketing to measure the asset value of a company name or a brand name, and consequently among accountants and business analysts, but is seldom used by economists. The purpose of this article is to begin to develop the concept of goodwill capital by presenting an analysis of what it is and some estimates of its likely magnitudes. We define goodwill capital, like the capital arising from R&D and advertising, as a form of intangible asset, albeit one which cannot be readily related to past investments in R&D, advertising, and capital equipment. We compute estimates of goodwill capital by deducting measures of these other three forms of capital from a firm's market value. For many companies, goodwill capital turns out to be the largest of its four capital stocks. Roughly half of our estimates of goodwill capital turn out to be negative.

Journal

Small Business EconomicsSpringer Journals

Published: Oct 13, 2004

References

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