I have just completed a global analysis of the market value of publicly traded companies with a market cap of $500mn or more. The objective is to understand the types of asset that are driving business value across different industry sectors. Is it the assets that appear on the balance sheet? Or is it the types of intangible asset (technology, art and relationships) that human beings are so good at creating but which do not generally appear on any balance sheet?
Yesterday I mentioned how the importance of tangible assets varied by industry. Today I want to share how it varies by country.
For the global economy as a whole, tangible book value accounts for around one third of market value. However, tangible book value accounts for pretty much 100% of the value of publicly traded Russian companies (lots of mining, energy and heavy manufacturing there) and close to 90% of the value of Japanese companies. At the other extreme, tangible book value accounts for only 15% of the value of US companies (reflecting the strength of the US in industries such as telecoms, infotech and healthcare). Interestingly, the UK, France and have similar results to the US. The figure for Germany, Switzerland, India and China is around 30%.
My two next steps are:
- Generate a more granular understanding of which types of tangible asset predominate in each industry
- Identify the components of intangible value and how they vary in importance by industry
