Getting a Grip on Intangibles

As any good student of stock valuations knows, companies are increasingly worth more than the sum of their parts.

In 1982, 62 percent of the public market value of the world's 150 largest companies could be attributed to their tangible assets—things like their buildings, inventory, and equipment.

By 1999, the proportion had fallen to a mere 16 percent, leaving a full 84 percent of a company's value reliant on intangibles. That includes not just patents, trademarks, and other intellectual property, but companies' good names, too.

Those reputations rely on corporate environmental, social, and governance practices. But how to systematically measure and compare those values?

A Bloomberg terminal can slice and dice hard numbers in a flash. How can anyone track squishier stuff like whether a company's supplier in Indonesia meets someone's definition of a sweatshop? That's much harder.

Until, perhaps, now.

Duff McDonald's article on a new firm that quantifies and compares these nonfinancial intangibles for Goldman Sachs and other Wall Street firms can be found here.