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The aim of this research is to analyse the impact of intangible assets on firm’s sporting and financial performance.
Abstract
Purpose
The aim of this research is to analyse the impact of intangible assets on firm’s sporting and financial performance.
Design/methodology/approach
The hypothesis of this research was developed through grounded theory and previous findings from the literature. This study adopted multiple regression method to analyse the impact of intangible assets on sporting and financial performance.
Findings
The findings indicate that intangible assets affect both sporting and financial performance. This is consistent with resource‐based view theory, which maintains that firms achieve a sustainable competitive advantage and superior financial performance by owning or controlling intangible strategic assets. By intangible strategic assets, it is meant the specific and valuable capability that belongs to the organisation.
Research limitations/implications
The finding of this study is limited to a sample of UK listed soccer corporations. A possible opportunity of future research is to replicate the current study with other corporations and explore alternative measures of intangible assets.
Originality/value
The main innovation contained in this study relies on the measure of intangible assets. This paper employed players’ registration costs as a measure of intangible assets. To my knowledge this has not been addressed before in finance and accounting research.
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Alan Fustec and Tanguy Faroult
According to several authors 50 per cent of mergers and acquisitions (M&A) operations destroy value. The aim of this paper is to study the reasons why it happens and to seek to…
Abstract
Purpose
According to several authors 50 per cent of mergers and acquisitions (M&A) operations destroy value. The aim of this paper is to study the reasons why it happens and to seek to reveal that intangible assets, which are increasingly important in today's economy, must be better assessed during the due diligence phase.
Design/methodology/approach
The authors present a part of the French intangible assets measurement approach, which has been published by the French Intangible Assets Observatory. The methodology proposes an extended balance sheet which is an interesting addition to the IAS‐IFRS intangible standard. It identifies 12 classes of intangible assets including human capital and customer capital.
Findings
The paper proposes a due diligence approach, using the French methodology and applies it to the insurance sector.
Research limitations/implications
This paper is not an academic paper. However, a significant research program is now underway in France. Academic publications are expected to be submitted.
Practical implications
The practice of intangible due diligence is a key issue in today's increasingly intangible economy. This practice is on the verge of a very strong development.
Originality/value
The paper presents a systemic approach to intangible assets. It answers a key question: what are the main assets that are necessary to start and continue a process of value creation? Accounting only recognizes the intangible assets that are not overly volatile, for prudential reasons. But even if customers or teams are “too intangible” for accountants, they are required to generate cash flows. If they are not evaluated, the process of wealth creation is not under control. This is crucial in M&A.
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The author examines key factors which affect intangible asset holdings of foreign subsidiaries of multinational enterprises (MNEs). The author developes the hypotheses by drawing…
Abstract
The author examines key factors which affect intangible asset holdings of foreign subsidiaries of multinational enterprises (MNEs). The author developes the hypotheses by drawing upon the pecking order theory in the finance literature and the institution theory. The author theorizes that MNE foreign subsidiaries combine and utilize their cash holdings (finance-based firm-specific advantages [FSAs]) with host country economic freedom (host country-specific advantages [CSAs]) in their holdings of intangible assets which are internally created and/or purchased. The author empirically tests the hypotheses using a new original dataset of European subsidiaries of US MNEs. The author finds that cash holdings and host country economic freedom share a significant and positive relationship with intangible asset holdings. The author discusses the implications of the findings for theory and practice.
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The purpose of this paper is to present valuation, economic, and corporate management aspects related to the design and implementation of intangible asset valuation in common…
Abstract
Purpose
The purpose of this paper is to present valuation, economic, and corporate management aspects related to the design and implementation of intangible asset valuation in common business language.
Design/methodology/approach
The methodology or approach to identifying or naming intangible assets within the business environment was used.
Findings
The purpose of intangible asset valuation is to understand what the intangible asset is and how it affects the bottom line of the business. Understanding the reason for the intangible asset valuation, whether for tax purposes, corporate planning, or dispute resolution, is paramount when considering the nature of the intangible asset to be valued.
Originality/value
Intangible assets are generally not included in active company management. Many companies do not recognize or investigate ways to maximize the income to be derived from intangible assets or other benefits of a centralized intangible asset management program. Fundamental to valuing intangible assets are their identification and subsequent representation. As presented in this paper, the three categories of intelligence identify intangible assets by the business value drivers that comprise them.
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Syed Musa Alhabshi, Hafiz Majdi Ab Rashid, Sharifah Khadijah Syed Agil and Mezbah Uddin Ahmed
This paper aims to address the financial reporting dimensions of intangible assets with specific reference to International Accounting Standards (IAS) 38 as well as relevant…
Abstract
Purpose
This paper aims to address the financial reporting dimensions of intangible assets with specific reference to International Accounting Standards (IAS) 38 as well as relevant International Financial Reporting Standards (IAS 38 exclusion) that are embedded within intangible assets. These have implications for Islamic financial assets with identifiable and measurable intangible components.
Design/methodology/approach
The study uses the qualitative research method by way of interviews followed by focus group discussions with professional accountants/accounting academics and Sharīʿah scholars/advisors from academia, the industry and regulatory bodies. Analysis of relevant literature is made to understand the subject matter and Sharīʿah-related issues.
Findings
The study observes that the accounting dimensions of tangible assets are generally consistent with Sharīʿah requirements. However, significant variation arises when the dimensions of intangible assets are represented in financial assets.
Research limitations/implications
The paper presents an exploratory in-depth analysis within the context of intangible assets as specified in IAS 38.
Originality/value
The paper elucidates the comparative accounting dimensions and Sharīʿah requirements in reporting financial assets.
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This paper aims to assess to what extent intellectual capital is revealed once a company is acquired.
Abstract
Purpose
This paper aims to assess to what extent intellectual capital is revealed once a company is acquired.
Design/methodology/approach
The research question was approached by analyzing official accounts of companies, like annual reports and documents provided to stock exchange authorities before and after the acquisition. In its purchase price allocation the acquiring company is providing insight in the total value of the company acquired.
Findings
The mean total value of the companies studied increases approximately six fold on acquisition. This increase is mainly due to the increase in intangible assets (including goodwill), which substantially overlap with intellectual capital. The intangible assets specified are mostly connected to rights‐related and technology‐related items, while goodwill shows more “bias” to expertise and customer‐related items. Thus it is hypothesized that a substantial part of the intellectual capital of the company acquired is revealed in the official accounts of the acquiring company.
Research limitations/implications
This study is limited to companies primarily in the pharmaceutical sector. The situation with respect to intangible assets may deviate from the situation in other industrial sectors. Another limitation is the restriction to public companies with respect to the acquiring party because of the information requirements imposed by the authorities. Further, this study was restricted in time to the last seven years in order to have a group of acquisition situations for which similar recent accounting guidelines apply.
Practical implications
This line of research could have practical implications for future valuation policies in acquisition situations and for intellectual capital valuation strategies.
Originality/value
The paper is a quantitative evaluation of intellectual capital in mergers and acquisitions based on formal accounting records.
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Jannatul Ferdaous and Mohammad Mizanur Rahman
Using the resource-based view and knowledge-based view as theoretical backdrop, the purpose of this paper is to explore the relationship between intangible assets and firm…
Abstract
Purpose
Using the resource-based view and knowledge-based view as theoretical backdrop, the purpose of this paper is to explore the relationship between intangible assets and firm performance.
Design/methodology/approach
The firms’ audited annual reports were collected during the period of 2007–2017 from 49 listed manufacturing firms of four industries in DSE, Bangladesh. This inductive research uses panel data (fixed-effect) estimation technique for balanced panel data to measure, describe, and analyze the firm performance.
Findings
After controlling some specific variables, the results reveal mixed behavioral effects of intangible assets on firm performance. Even if intangible assets trigger a significant rise in the firms’ EPS (a measure of financial performance), the firms cannot maximize shareholders’ wealth due to their poor performance in the stock market of Bangladesh.
Practical implications
The proposed models could be important tools for managers to integrate intangible assets in their decision process. The proposed models could also be important tools for investors to select their portfolios that have a track record for continuous investment in intangible assets in an efficient and sustainable way.
Originality/value
Intangible assets are largely absent from the firms’ balance sheet. Consequently, previous empirical research works struggled to measure and quantify the effects of intangible assets on firm performance. The study fills that gap in the understanding of intangible assets’ nature, measurement method, and their effects on firm performance.
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Gita Mathur, Kam Jugdev and Tak Shing Fung
To explore the role of intangible project management assets in achievement of competitive advantage from the project management process through it being valuable, rare…
Abstract
Purpose
To explore the role of intangible project management assets in achievement of competitive advantage from the project management process through it being valuable, rare, inimitable, and having organizational support.
Design/methodology/approach
Data were collected on tangible and intangible project management process assets and competitive characteristics of the project management process using an online survey of North American Project Management Institute™ members. Three key tangible asset factors, one intangible asset factor, and three competitive characteristics were identified using exploratory factor analysis. The relationship between these project management assets and project management process characteristics are examined using multivariate analysis.
Findings
Intangible project management assets are found to be a source of competitive advantage, directly and through a mediating role in the relationship between tangible project management assets and the competitive characteristics of the project management process.
Practical implications
This study highlights the importance of developing intangible project management assets, in addition to investment in tangible project management assets, to achieve competitive advantage from the process.
Research limitations/implications
This was an exploratory study. The authors expect to further develop the instrument, refine the model and constructs, and test it with a larger sample.
Originality/value
Few papers have used the Resource Based View lens and applied it to project management. This paper contributes to the literature on the Resource Based View of the firm and to an improved understanding of project management as a source of competitive advantage.
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Frank Schiemann, Kai Richter and Thomas Günther
The capitalisation of intangible investments is discussed controversially in the financial accounting literature. International accounting standards are concerned with this issue…
Abstract
Purpose
The capitalisation of intangible investments is discussed controversially in the financial accounting literature. International accounting standards are concerned with this issue and generally demand more intellectual capital to be recognised on the face of the balance sheet. If investors and analysts already gather monetary information about intangible assets from the financial report and find such information useful, then the necessity to complement such information with voluntary intellectual capital disclosure will diminish. Accordingly, there should be an association between recognised intangible assets and voluntary intellectual capital disclosure. The paper aims to discuss these issues.
Design/methodology/approach
The authors analyse the voluntary disclosure of 264 investor conference and roadshow presentations of German DAX 30 firms in the year 2001, 2003, 2005, and 2007. The authors apply regression models to analyse the association between recognition of intangible assets and voluntary intellectual capital disclosure and control for other determinants of voluntary disclosure.
Findings
The authors find that the magnitude of recognised intangible assets is significantly and negatively associated with the quantity and quality of voluntary intellectual capital disclosure. The authors show that this association is mainly driven by goodwill accounting. In more detailed analyses we find different directions (positive, negative and insignificant) of this relationship for different categories of intellectual capital.
Research limitations/implications
Future studies on voluntary intellectual capital disclosure need to consider recognised intangible assets as a determinant to avoid omitted variable problems.
Practical implications
The authors provide descriptive evidence about voluntary intellectual capital disclosure practice of Germany’s largest firms.
Originality/value
The paper provides primary evidence on the association between recognised intangible assets and voluntary intellectual capital disclosure.
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Abdifatah Ahmed Haji and Nazli Anum Mohd Ghazali
The purpose of this paper is primarily to explore the extent of intangible assets and liabilities of large Malaysian companies. The authors also examine whether intangible assets…
Abstract
Purpose
The purpose of this paper is primarily to explore the extent of intangible assets and liabilities of large Malaysian companies. The authors also examine whether intangible assets and liabilities of a firm have similar or contrasting roles in firm performance.
Design/methodology/approach
Using a direct and straightforward measure of intangible assets and liabilities, the authors examine a large pool of data from large Malaysian companies over a six-year period spanning from 2008 to 2013.
Findings
The longitudinal analyses show a significant number of the sample companies, between 34 and 59.33 percent, have a consistent pattern of intangible liabilities. The authors also find firms with intangible liabilities have significantly underperformed financially than a control group of firms. In addition, the authors find that intangible liabilities have significant negative impact on firm performance whereas intangible assets have a contrasting positive impact on firm performance.
Research limitations/implications
One limitation of this study is that the authors have only used a single measure of intangible assets and liabilities. Albeit the measures used are straightforward and more objective, there could be other measures to capture intangibles.
Practical implications
The research findings have several theoretical as well as policy implications. Theoretically, the authors extend the resource-based view to the intangible asset-liability mix, affirming the crucial role of intangible resources in financial performance whilst introducing the unfavorable role of intangible liabilities in corporate financial performance. In terms of policy implications, the research findings provide initial empirical input to emerging calls for broader perspectives of intangibles, beyond intangible assets to include intangible liabilities, and therefore belong to an emerging paradigm toward the nature of intangibles.
Originality/value
This study documents a rare empirical account of the contrasting roles of intangible assets and liabilities in corporate financial performance.
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