An Empirical Study on the Difference Between the Market Value and the Book Value of Firms in the Electronics Industry

• Main Authors: Tsai, Chi-Te, 蔡基德
• Other Authors: Tsai, Yann-Ching
• Format: Others
• Language: zh-TW
• Published: 2001
• Online Access: http://ndltd.ncl.edu.tw/handle/19679219619758591413

碩士 === 國立臺灣大學 === 會計學研究所 === 89 === This study is aimed at identifying causes to the difference between the market value and the book value of firms, typically measured by the market-to-book ratio. Accounting researchers argued that the difference results from three main factors:（i）unrealized gains or losses caused by GAAP;（ii）mismatching of costs with revenues; and（iii）intellectual capital that is used to create competition advantage. This study scrutinizes association between the market-to-book ratio and proxy variables of the three factors by examining 135 technology companies listed on TSE and ROSE (R.O.C Over-the-Counter Securities Exchange). Key findings are as follows: 1.Both unrealized gains (or losses) of short-term and long-term securities investment and unrecognized pension liability do not significantly correlate with the market-to-book ratio. The empirical evidence does not support the argument that unrealized gains (losses) contribute to the difference between the market value and the book value. 2.The relationship between the preceding four-year R&D expenses and the market-to-book ratio is positive and significant statistically. The finding bears evidence that R&D expenses generate lagged benefits, and should be capitalized. Preceding four-year AD expenses, however, have no effect on the market-to-book ratio. Such finding could be attributed to the small size of AD expenses. In conclusion, the overall empirical results support the assertion that the mismatching of costs with revenues causes the difference between the market value and the book value. 3.This study adopts patents and human resource as indicators of intellectual capital. The approved invention-type patents are positively related to the market-to-book ratio. Secondly, employee productivity as well as educational level are associated positively and significantly with the market-to-book ratio. Human resource is critical to technology companies as they continue to develop and harness their technological capabilities. Employees of high quality make creative and innovative companies. Consequently, the empirical results reveal that the difference is ascribable to how well firms manage their intellectual capital.