Search results

IAS 1 (“Presentation of financial statements”) requires that application of all international standards is necessary in order to comply officially with International Accounting Standards. This appears to be a key statement for the move towards accounting harmonization. The feasibility of this kind of harmonization could be jeopardized if even one standard is “rejected” by companies. In this context, in the wake of the publication of IAS 38 “Intangible assets”, examines the ways that 21 national and two international accounting standards approach intangibles, both in terms of definition and treatment. Shows that there is no conceptual framework commonly accepted and that there is a considerable lack of consistency both inter‐country and intra‐country. This challenges the principle of the acceptability of all international accounting standards by companies that wish to or are required to apply IASs. The disharmony highlighted by the advent of IAS 38 could be a sign of the failure of international accounting harmonization.

The purpose of this study is to identify the norms that underlie and condition the decisions made by preparers of financial reports.

This interview-based study illustrates how financial report preparers engage in behaviors linked to the perception of recognition and measurement of internally generated intangible assets by important stakeholders. All of the companies included in the study adhere to International Financial Reporting Standards when creating their consolidated financial statements. The participants selected for the study are involved in accounting decisions related to research and development in accordance with International Accounting Standard (IAS) 38.

The authors identify the normative assumptions underlying the recognition and measurement of internally generated intangibles, which are based on concerns of consistency, credibility and reasonableness. The authors find that the normative basis for legitimacy in financial accounting is primarily related to cognitive legitimacy and is not of a moral or pragmatic nature.

The study reveals that recognition and measurement of internally generated intangibles in financial accounting relate to legitimacy. The authors identify specific norms that form the basis of this legitimacy, namely, consistency, credibility and reasonableness. These identified norms serve as constraints, mitigating the risk of judgment misuse within the IAS 38 framework for earnings management.

In 2000, Cañibano et al. published a literature review entitled “Accounting for Intangibles: A Literature Review”. This paper revisits the conclusions drawn in that paper. We also discuss the intervening developments in scholarly research, standard setting and practice over the past 20+ years to outline the future challenges for research into accounting for intangibles.

We conducted a literature review to identify past developments and link the findings to current accounting standard-setting developments to inform our view of the future.

Current intangibles accounting practices are conservative and unlikely to change. Accounting standard setters are more interested in how companies report and disclose the value of intangibles rather than changing how they are determined. Standard setters are also interested in accounting for new forms of digital assets and reporting economic, social, governance and sustainability issues and how these link to financial outcomes. The IFRS has released complementary sustainability accounting standards for disclosing value creation in response to the latter. Therefore, the topic of intangibles stretches beyond merely how intangibles create value but how they are also part of a firm’s overall risk and value creation profile.

There is much room academically, practically, and from a social perspective to influence the future of accounting for intangibles. Accounting standard setters and alternative standards, such as the Global Reporting Initiative (GRI) and European Union non-financial and sustainability reporting directives, are competing complementary initiatives.

Our results reveal a window of opportunity for accounting scholars to research and influence how intangibles and other non-financial and sustainability accounting will progress based on current developments.

This article analyzes the links between financial reports and reputation in the context of Finnish public sector organizations. In general, the paper discusses the accounting treatment of intangible and tangible assets and the quality and relevance of public sector financial reporting.

For data, we combine three data sets: financial statement information of eight anonymous Finnish public organizations, the results of a reputation survey among their key stakeholders (N = 914) and a sample of the social media sentiment around the organizations.

Our findings suggest that a decrease in spending and, surprisingly in the nonprofit sector, an increase in the surplus, indicate better perceived financial performance. An increase in surplus is positively linked with the reputational factors, for example, trust. However, disclosing excessive amounts of information, for example, in financial reporting seems to contribute to negative discussions on social media.

We highlight the importance of managing intangibles, including those not recognized in the balance sheet, such as reputation. We present three propositions with potential managerial relevance.

Despite the considerable amount of financial information disclosed by public sector organizations, few studies have analyzed its relevance or connection to reputation. This first-of-a-kind paper combines intangible and tangible assets by analyzing how financial data and intangible reputation are linked in the public sector accounting context. Six reputational factors were discovered, and financial performance was found to correlate with trust in the public sector.

The purpose of this paper is to study the information content of intangible assets under IAS/IFRS when compared to local GAAP for European listed companies.

The paper employs multivariate regression models for a sample of 1,855 European listed firms in a six‐year period, from 2002 to 2004 in local GAAP and from 2005 to 2007 in IAS/IFRS to investigate the empirical relationships between market value of European firms and book value of their intangible assets.

The results suggest that the book value of other intangible assets of European listed firms is higher under IFRS than local GAAP and has more informative value for explaining the price of the share and stock market returns. European investors, however, consider the financial information conveyed by capitalized goodwill to be less relevant under IFRS than with local GAAP. Thus, identified intangible assets capitalized on European company balance sheets provide more value‐relevant information for shareholders than unidentified intangible assets that have been transferred into goodwill, with the exception of Italian and Finnish investors.

The paper adds to the existing literature on IFRS by documenting the association between the market value of European listed firms and the book value of their goodwill and other intangibles assets. The study complements prior studies by demonstrating that country differences persist despite the use of common accounting standards and that legal and regulatory country characteristics as well as market forces could still have a significant impact on the value relevance of accounting data.

Guidance Note 1 of the Red Book states that the valuation of an operational entity includes four components: the land and buildings; the trade fixtures and fittings; the trading potential, excluding personal goodwill; and the benefit of any transferable licenses and consents. Accounting changes in recent years have increasingly recognised the importance of intangible assets such as intellectual capital and goodwill. Similarly, recent tax changes demonstrate the government's acceptance of the importance of such items in achieving and maintaining business competitiveness. This paper has two key objectives: first, to analyse the application of the Red Book to trade‐related valuations, paying particular attention to the treatment of goodwill and second, to critically evaluate the accounting treatment of goodwill and in particular the application of Financial Reporting Standard 10. In order to understand the workings of the market, the corporate hotel sector was used as a case study. The key findings of the research are that valuers expressed considerable unease with the apportioning of market value between tangible assets and goodwill, there was no consensus on how (or if) goodwill could be measured reliably. Second, that the valuation methods adopted are, to a degree, naïve. While explicit changes are made to the cash‐flow projections, there is insufficient appreciation of the changing risk profile that might lead to an adjustment to the earnings multiplier. The accounting difficulties and inconsistencies concerning goodwill arise largely because of inadequate valuation methods. Recent tax changes also point to the need for a robust and defendable valuation methodology. Application of one such theoretically sound approach to valuing goodwill (the bridge model) is illustrated in this paper. While the research focused on the corporate hotel sector, the findings have wider implications for other sectors of the market where operational entities are valued with regard to their trading potential.

In this paper content analysis is used to examine the lobbying positions of publicly listed companies making submissions on ED 49, Accounting for Identifiable Intangible Assets. A number of content analysis measures are used in an attempt to gain additional insights into the strength of lobbying positions held. The influence of debt contracting and political costs variables upon lobbying position on capitalisation and amortisation of identifiable intangible assets is investigated. Significant relationships are found with the explanatory variables interest coverage, company size, effective tax rate and membership of a politically sensitive industry. These relationships are most consistently observed when lobbying position is measured using more basic content analysis techniques, such as sentence counts and counting the number of supporting arguments presented in submissions. Use of apparently more sophisticated techniques of content analysis fail to perform as well, possibly due to the introduction of greater subjectivity to the process.

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.

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.

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.

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.

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.

This study documents a rare empirical account of the contrasting roles of intangible assets and liabilities in corporate financial performance.

In 2001, the Accounting, Auditing & Accountability Journal (AAAJ) published a special issue entitled “Managing, measuring and reporting intellectual capital for the new millennium”. After 20 years, we revisit the eight articles in this special issue to trace early developments in interdisciplinary intellectual capital (IC) accounting research, link these developments to the current state of play, and set out an agenda for future research. The paper aims to discuss this issue.

This paper, written reflectively, includes an impact assessment of the articles using citation analysis and a thematic framing of the prominent issues they discussed. We critically reflect on the status of these eight foundational papers after 20 years, before presenting propositions for a multidisciplinary IC research future.

We find that IC research needs to extend beyond organisational boundaries to help improve human rights, human dignity and the human condition as part of the wider interdisciplinary accounting project. We argue that fifth stage IC research can assist because it explores beyond organisational boundaries and helps address the wicked problems of the world.

This paper only investigates the themes found in the AAAJ special issue. However, the implications for researchers are intended to be transformational because, to go forward and help resolve the material issues facing society and the planet, researchers need to move from being observers to participants.

We argue that IC researchers must embrace both interdisciplinary and multidisciplinary IC research. This requires IC researchers to reflect on what they are trying to achieve and which issues facing the planet are material.

This paper analyzes two types of potential intangible public-sector assets for consideration by public-sector accounting boards. Government investments in health and social programs can create two potential intangible assets: the intangible infrastructure used to deliver the health or social program and the enhanced human capital embodied in the recipients of program services. Because neither of these assets is currently recognized in a government's year-end financial statements or broader general-purpose financial reports (GPFR), these reports may underrepresent the government's true fiscal and service capacity.

The paper uses an international accounting standards framework to analyze: whether investments in health and social programs create intangible assets that meet the definition of an asset as set out by International Public Sector Accounting Standards (IPSAS), whether they are assets of the government and whether they are recognizable for the purpose of financial reporting.

The intangible infrastructure asset created to facilitate the delivery of health and social programs would often qualify as a recognizable asset of the government. However, the enhanced recipient human capital asset created through the delivery of health and social programs would, in most instances, not qualify as a recognizable asset of the government, though there likely would be benefits from reporting on it through GPFRs or other mechanisms.

This paper makes two contributions. First, it identifies a previously overlooked intangible asset – the infrastructure created to facilitate the delivery of health and social programs. Second, it presents an argument regarding why, even when it fails to generate a recognizable intangible asset to government, it would be valuable for government to report such investments in supplementary statements.