Abstract
This paper studies the value relevance of Intellectual Capital by comparing a set of different valuation models. The empirical analysis covers 300 large European companies from 1990 to 2001. Drawing on the Ohlson (1995) and Feltham-Ohlson (1995) model, I define and test the value relevance of an Intellectual Capital earnings measure, providing evidence for the superior explanatory power of this metric compared to other income measures. I also find evidence for the superior explanatory power of a valuation function, based on IC earnings and operating earnings.
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