Unlocking Hidden Value
How Corporate Language Reveals the Future of Intangible Investment
Intangible assets—things like brand reputation, proprietary knowledge, and organizational capabilities—have become more valuable than physical factories and equipment with many studies estimating that intangibles now account for roughly one third to one half of corporate capital. However, measuring these assets remains one of finance’s great challenges. Andrea Eisfeldt, Barney Hartman-Glaser, Edward Kim, and Ki Beom Lee, authors of the November 2025 study “Intangible Intensity,” tackled this problem by using artificial intelligence to decode what companies are really telling us about their intangible investments.
What the Researchers Examined
The research team developed a novel approach to measure intangible investment by analyzing the language companies use in their annual 10-K filings. Rather than relying solely on accounting data, which often obscures or incompletely captures intangible spending, they built a sophisticated text-processing framework that identifies when companies discuss investments in knowledge, customer relationships, and organizational capabilities.
Their method combines modern AI tools with traditional transparency. They used a large language model to isolate relevant passages from regulatory filings, then employed advanced embedding techniques to identify patterns across roughly 10,000 frequently-used phrases. The result is an “intangible intensity” score that captures what proportion of a company’s narrative focuses on intangible-related activities. Their data covered nearly the entire universe of public firms from 2002–2023.
Critically, they broke this overall score into three distinct components: knowledge capital (R&D, innovation, technical expertise), customer capital (marketing, brand building, customer acquisition), and organization capital (internal processes, management systems, operational capabilities).
Key Findings
You can read the rest of my Alpha Architect article here.