Ekonomika a management
EMPIRICAL STUDY ON THE IMPACT OF EVALUATION OF INTANGIBLE ASSETS ON THE MARKET VALUE OF THE LISTED COMPANIES
The shortcomings in traditional financial reporting have become more than obvious, if we look at the results of different researches or studies in the field, but especially according to the thesis supported by Robert Eccles, from Harvard Business School, which shows that only 25% of the market value of a company can be attributed to its accounting value, the rest of 75% coming from the evaluation of the value created by IA (such as strategies, product innovation, customer loyalty, future profits, goodwill, etc), which are fully accounted for only extraordinary events, such as acquisitions and mergers of companies, or the sale of their subsidiaries (Eccles, 1991). Thus, only a small part of the factors that contribute to the creation of value are identified and presented in the reporting used by investors, which obviously creates an obstacle in understanding the mechanisms of value creation, taking into account the strategic importance of IA.
Jméno a příjmení autora:
Cristina Gabriela Cosmulese, Marian Socoliuc, Marius-Sorin Ciubotariu, Veronica Grosu, Dorel Mateş
Internally generated intangible assets, valuation, book value, market value, econometric model
DOI (& full text):
The accelerated pace of economic development, the digital revolution and the internationalization of business has meant for some entities the creation or acquisition of intangible assets (IA), which…více
The accelerated pace of economic development, the digital revolution and the internationalization of business has meant for some entities the creation or acquisition of intangible assets (IA), which have become increasingly important for the economic prosperity and for determining the global value of a company, also becoming an important incentive in creating added value. The aim of this paper is focused on analyzing the impact of internally generated intangible assets on the market value of the companies. In order to achieve this aim, we conducted an empirical study involving a sample of 180 NASDAQ and NYSE listed entities between 2007 and 2016. The sample has obtained by applying the inclusion and exclusion criteria on the 500 large-capitalization companies (S&P 500 Index). Making use of regressive techniques, the authors undertook an econometrical model to test whether the impact of intangible assets on the market value of the entities increases when are provided complete, clear and easy-to-understand accounting information about the intangible assets value, which aid business to properly estimate corporate value ratio and reduce implicit bias, due to mainly taking into account those reported values when measuring an entity’s value. The results revealed an impact of the value of the reported and unreported IA on the market value of the entities, for manufacturing companies relative to service companies, which generates an added value on the capital market and implicates a close linkage of disclosure compliance and the associated industry sector. The proposed model can be an inspiration for the legislator to change the structure of financial reporting, or anticipated a valuable informational source for increasing the quality of integrated reporting of economic entities.
Ekonomika a management