Effects of Cash Holding and Intangible Assets on Firm Value

Abstract

We examine the effects of cash holding and intangible assets on firm value. Using the listed companies in the KOSPI and KOSDAQ markets, we find the following results. First, cash holding and intangible assets are positively related to firm value measured by Tobin’s Q(TQ) for the KOSPI market. Second, intangible assets are positively related to TQ for the KOSDAQ market. But cash holding is not related to TQ for the KOSDAQ market. Third, cash holding is positively related to economic value added (EVA) for the KOSPI market, while intangible assets are negatively related to EVA for the KOSPI market. Four, cashing holding is positively related to EVA for the KOSDAQ market but intangible assets are negatively related to EVA for the KOSDAQ market. In summary, these results imply that first, cash holding increases firm value up to the breakpoint, after which the cash holding reduces firm value.