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This paper is an addition to the current debate on how to measure and recognise intellectual assets and liabilities. A conceptual approach has been proposed so that intellectual assets and liabilities can be recognised in the financial statements using market value as a reference point acknowledging that intellectual assets and liability items cannot be measured accurately to recognise them individually. It was constructed using the common ground between financial reporting and intellectual assets and liability management. It has used an intellectual assets definition, an intellectual assets indicator at an organizational level, the Australian conceptual framework in accounting and recently published and revised accounting standards in Australia as tools for its construction.

At The Dow Chemical Company, Intellectual Assets are regarded as knowledge with a value and are a key factor in creating wealth for the company. These Intellectual Assets include patents, trade secrets, trademarks and know‐how. The company has devised a six‐step Intellectual Asset model which involves strategy setting; identification and classification of existing Intellectual Assets; valuing these assets; deciding whether to invest in new knowledge through the development or purchase of technology and skills; and assembling the Intellectual Assets into Knowledge Portfolios for each global Dow business. This process is repeated on a regular basis. This paper discusses how the methodology has been developed and implemented at Dow, including the company’s approach to creating a Global Intellectual Asset Technology Centre and multi‐functional and multi‐geographic Intellectual Asset teams. Tools and techniques developed for measuring the company’s Intellectual Assets are generic and may be appropriately applied to any organization.

There is a dramatic increase in the number of companies whose value lies largely in their intangible assets; with relatively little or no value associated with their tangible assets. Traditional methods of valuation, based on accounting principles, where the value of the firm’s assets is a portion of the value, have systematically undervalued companies such as these. This article discusses the problem of valuing intangibles companies and suggests two approaches to determining their value. It also describes two common circumstances where company value is desired and discusses how value may be determined using a non‐traditional perspective on the company along with traditional methods for valuation. The two circumstances examined are the going‐concern value and the value under merger or acquisition circumstances (recognizing that these two circumstances produce very different valuations for the corporation).

This paper argues that intellectual capital and intangible assets are difficult resources for two different reasons. First, intellectual capital and intangibles assets are not (yet) disentangled by the institutions of the capital markets, and therefore they are not (yet) translatable with any degree of confidence into predictions about stock price behaviour. Second, intellectual capital and intangibles are not absent from capital market intelligence; they are just typically translated into financial form, when they are presented to actors in the capital markets, even if in forms that are themselves “invisible”. The capital market may have limited understanding of intellectual capital, but it is also always seeking to understand the complexity of business and (im)possible futures. Its appreciation of intellectual capital is therefore fragile.

This paper aims to assess to what extent intellectual capital is revealed once a company is acquired.

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.

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.

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.

This line of research could have practical implications for future valuation policies in acquisition situations and for intellectual capital valuation strategies.

The paper is a quantitative evaluation of intellectual capital in mergers and acquisitions based on formal accounting records.

This paper summarizes a study, undertaken by Arthur Andersen’s Intellectual Property Group in London, to consider the economic and financial issues, principally as they affect the valuation of intellectual property and its suitability as security. The study encompasses a review of available literature, interviews and discussions, and an analysis of the results of a questionnaire which was distributed to owners and managers of intellectual property. Views were canvassed across industries, of both borrowers and lenders, and also of lawyers and other advisers experienced in the transactions involving intellectual property.

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.

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.

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.

Future studies on voluntary intellectual capital disclosure need to consider recognised intangible assets as a determinant to avoid omitted variable problems.

The authors provide descriptive evidence about voluntary intellectual capital disclosure practice of Germany’s largest firms.

The paper provides primary evidence on the association between recognised intangible assets and voluntary intellectual capital disclosure.

Contends that the current treatment of intellectual capital possessed by organizations (either knowledge intensive or otherwise) has been somewhat superficial. For instance, the terms “intellectual” assets and “intangible” assets have often been used interchangeably, although a case can be made that there are differences between these two groups of assets. To date there has been too much focus on intellectual assets – and to some extent an implied equivalence between intellectual assets and intellectual capital. Considers the issue of the other factor within the intellectual capital equation, namely, intellectual liabilities. For if double entry is to apply in the area of intellectual capital then with every debit (in the sense of a building up) there should also be allowed the possibility of a credit (in the sense of a reducing down). In fact intellectual capital is more appropriately derived as a net figure (subtracting intellectual liabilities from intellectual assets) rather than a mere summation of the organization’s identified intellectual assets. Whether or not actual absolute values can be derived is also considered questionable.

The purpose of this paper is to provide a quantitative assessment model for intellectual capital in companies.

A brief historical review of former approaches to evaluate intellectual capital construction of a new formula for an intellectual capital value. A possible empirical survey of influence factors on intellectual capital is suggested. Both, taken together, are the grounding of an integrative management model for intellectual capital still to be developed.

Shows that a quantitative figure for intellectual capital can be found and that such a figure is needed to convince managers and the public of the usefulness of activities to promote intellectual (and especially human) capital.

A quantitative measure can never picture the complete interrelations of organizational development, influence factors on intellectual capital, and performance of employees. The formula can only be a starting‐point for management and further research. Possible management tools are only touched on briefly.

Gives the manager a tool to argue his decisions regarding the promotion of human and intellectual capital. Managers talk about figures and often dislike purely philosophical arguments. Their awareness of the topic can be raised.

Even though there is a growing scientific body of quantitative models for measuring intellectual capital, this paper uses a new approach: the usage of approximation factors for motivation, commitment and job satisfaction in one formula.

This paper aims to focus on how small knowledge‐intensive business service (KIBS) firms manage their knowledge‐based processes, or what are termed “intellectual assets”.

The paper is based on data collected from a sample of small KIBS firms located in Scotland. The methodological approach is novel in that it utilises the results of an online benchmarking tool allowing firms to gauge their intellectual asset base in comparison with other firms.

The paper finds that approaches to the strategic management of intellectual assets vary significantly according the size and type of KIBS firm. Differences in these approaches impact on the development of effective innovation processes, with resource deficiencies in smaller firms constraining their innovation capability.

It is concluded that small KIBS firms face particular challenges in managing the innovation process and establishing sustainable knowledge management practices, and may benefit from targeted policy intervention.

Unlike many other studies of KIBS firms, this paper focuses on how small KIBS firms manage their own knowledge processes as part of their strategic management approach for creating competitive advantage.