Type of Submission

Refereed Article


In publicly traded firms, there is usually a discrepancy between the market value and the book value of the firm, often due to the valuation of intangible assets. Understanding this discrepancy is import- ant for investors, especially in the service industries like hospitality, where there is considerable industry disruption and consolidation. In this study we examine the effect of four intangible asset investments—research and development (R&D), training, advertising, and pension—on the market premium of restaurant firms. Using a longitudinal sample of 1,421 firm-year observations, the results of our analyses show that R&D, training, advertising, and pension are all important valuation con- structs in the hospitality industry, and their effects on market premium vary by restaurant type. This study fills the gap in the current literature by providing a quantitative method to value intangible assets in the hospitality industry. The practical implications of this study will provide managers in the hospitality industry with helpful insights for strategic decision making, specifically regarding R&D, advertising, and employee compensation.