Intangibles and the UK under-investment puzzle: Evidence from firm-level panel data

This paper analyses the relationship between intangibles and the low business investment relative to Q at the firm-level. Using a large panel of UK firms, the findings suggest that a negative association exists between intangibles and fixed investment. The under-investment gap since 2002 can be largely reduced by controlling for intangibles. In particular, the impact is magnified for firms with higher leverage, lower tangibility and lower labour productivity