Abstract
The study seeks to investigate the effect of invisible intangible assets on volatility of stock prices as an important indicator of firm value. Valuations of volatility of share prices have become a major challenge for firms; several literature evidences suggests that firm value is not only restricted to physical assets value but also to non-physical assets. The study examines whether invisible intangible assets represented by the amount of costs incurred on research and development, marketing and compensation affects the volatility of stock price. The study relies on secondary data of 59 publicly traded companies in Jordan selected from different economic groups for the period from 2012 to 2016. An OLS regression was run and the results of the entire data set gives significant positive correlation between marketing costs and volatility of stocks; whilst compensation costs was positively negative correlated to stock prices and finally the costs of research and development did not prove any effect on volatility of stock prices.
Highlights
Value of entity was always regarded as important sign for wealth of investor’s
Valuations of volatility of share prices have become a major challenge for firms; several literature evidences suggests that firm value is restricted to physical assets value and to non-physical assets
The study examines whether invisible intangible assets represented by the amount of costs incurred on research and development, marketing and compensation affects the volatility of stock price
Summary
Value of entity was always regarded as important sign for wealth of investor’s. This value is crucial element for investors and needs to be improved and maximized constantly. For this reason, it is necessary to search, understand and enhance the factors that the value of entity is derived of. It is necessary to search, understand and enhance the factors that the value of entity is derived of Their always an agreement by market participants that firm value is reflected in its stock market price (Tsutomu et al, 2013). Other conclusions found significant portion of intangible assets are hidden in the reported expenditures of companies in income statement (Salamudin, 2010)
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