Intangibles and performance in oil and gas industry

Abstract

Purpose

The purpose of this paper is to assess the extent to which financial and market performance of companies in the oil and gas sector can be attributed to the value of their intangibles.

Design/methodology/approach

The research utilized publicly available data on global oil and gas companies from 2000 to 2015. Panel data analysis was used to assess the relationship between intangibles (measured by Calculated Intangible Value (CIV)) and financial and market performance of these companies.

Findings

Results show that intangibles had a significant impact on firm performance in multiple financial measures. Firms’ intangibles also influence their market capitalization, indicating that the financial markets discount such information in their pricing.

Research limitations/implications

Although the impact of intangibles on corporate performance is found to be significant, the size of that impact is small, suggesting that significant increase in the size of intangibles would only lead to a modest increase in corporate performance. Additionally, the research sample was limited to the top oil and gas firms listed in the Fortune 2000 global list and limits the generalization of the findings. Despite these limitations, the research provides greater confidence in using CIV to assess intangibles in organizations.

Practical implications

This research highlights the importance and ways of measurement of intangibles for managers in oil and gas companies and its significance for their firms’ performance.

Originality/value

The paper fills the gap in the literature in the assessment of intangibles in the oil and gas sector, as well as in the assessment of using CIV to measure the impact of intangibles on company performance.

Citation

Dženopoljac, V., Muhammed, S. and Janošević, S. (2019), "Intangibles and performance in oil and gas industry", Management Decision, Vol. 57 No. 5, pp. 1267-1285. https://doi.org/10.1108/MD-11-2017-1139