Department of Finance, National Chung Hsing University, Taichung
While intangible assets are hard to assess and do not appear on a firm’s balance sheet, a firm’s intangible assets are found to correlated with its market performance. Our investigation collects intangible assets broadly representative of public trust, such as a firm’s reputation, employee relations, brand quality, and social ethics. A portfolio of firms constructed according to these intangible assets significantly outperforms any single intangible asset indicator. Corporate social responsibility investment is also investigated using the KLD Research & Analytics database. After excluding firms with product safety concerns and excessive board compensation, the remaining firms significantly outperform the initial portfolio.