Longitudinal Earnings Value Relevance and Intangible Assets: Evidence from Australian Firms, 1975-99

2003 ◽  
Author(s):  
John Goodwin
Keyword(s):  
Intangible Assets ◽  
Value Relevance

scholarly journals The Value of Discretion in Africa: Evidence from Acquired Intangible Assets Under IFRS 3

2020 ◽  
Vol 55 (02) ◽  
pp. 2050008
Author(s):  
Abongeh A. Tunyi ◽  
Dimu Ehalaiye ◽  
Ernest Gyapong ◽  
Collins G. Ntim
Keyword(s):  
Financial Reporting ◽  
Intangible Assets ◽  
Value Relevance ◽  
Managerial Discretion ◽  
African Countries ◽  
Target Firm ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Main Hypothesis

This paper examines the value of managerial discretion in financial reporting by exploring the value relevance of intangible assets acquired in business combinations (AIA) before and after the 2008 International Financial Reporting Standard (IFRS) 3 amendment. The 2008 IFRS 3 amendment gave managers the discretion to recognize previously unrecognized intangibles in the target firm, hence, we posit that if managerial discretion improves the quality of financial reporting, we should observe an increase in the value relevance of AIA after the amendment. Our empirical analysis is based on a dataset of 603 mergers announced between 2004 and 2016, across seven African countries. Consistent with our main hypothesis, we find that the value relevance of AIA, predominantly acquired goodwill (AGW), increased after the amendment, suggesting that managerial discretion improves the quality of financial information. Our results further show that the value of discretion is moderated by the underlying institutional quality, with the value relevance of AIA being greater in high-quality institutional contexts. Our findings are robust to alternative measures of AIA, alternative models for testing value relevance, and various controls for endogeneity. Overall, our findings have important implications for accounting standard-setters, governments, investors, and practitioners.

Intangible assets and value relevance: Evidence from the Portuguese stock exchange

2010 ◽  
Vol 42 (4) ◽  
pp. 241-252 ◽  
Author(s):  
Lídia Oliveira ◽  
Lúcia Lima Rodrigues ◽  
Russell Craig
Keyword(s):  
Intangible Assets ◽  
Value Relevance ◽  
Stock Exchange

scholarly journals Empirical Evidence on the Value Relevance of Brand Values across Countries

2018 ◽  
Vol 11 (2) ◽  
pp. 197
Author(s):  
Grazia Dicuonzo ◽  
Andrea Perrone ◽  
Vittorio Dell'Atti
Keyword(s):  
Stock Prices ◽  
Intangible Assets ◽  
Value Relevance ◽  
Empirical Studies ◽  
Balance Sheet ◽  
Business Success ◽  
Accounting Data ◽  
Related Information ◽  
Consulting Firms ◽  
Brand Values

Stock prices reflect firms-related information differently depending on the environmental and institutional context. However, previous empirical studies test mainly accounting data. Since intangible assets became a crucial element for business success and brands are considered critical for value creation, correlated disclosure is proven to be value relevant for investors. The majority of accounting standards do not allow to recognize internally generated intangible assets in the balance sheet and therefore more and more practitioners, both investors and analysts, use brand values provided by third independent parties, such as consulting firms. The purpose of this paper is to investigate whether and how brand-related information differs across countries testing the value relevance of brand values published in Brand Finance’s Reports. This study aims to open a new stream of literature regarding the value relevance of non-accounting information across countries.

scholarly journals The Value Relevance and Reliability of Brand Assets Recognized by U.K. Firms

2004 ◽  
Vol 79 (1) ◽  
pp. 151-172 ◽  
Author(s):  
Sanjay Kallapur ◽  
Sabrina Y. S. Kwan
Keyword(s):  
Stock Price ◽  
Intangible Assets ◽  
Value Relevance ◽  
Financial Statements ◽  
Price Reaction ◽  
Market Values ◽  
Brand Recognition ◽  
Brand Values ◽  
Stock Price Reaction ◽  
Relevance And Reliability

We examine the value relevance and reliability of brand assets recognized by 33 U.K. firms, and the stock price reaction to the announcement of brand capitalization. We find that brand assets are value relevant, i.e., associated with market values. However, the market capitalization rates of brands of firms with low contracting incentives are higher than those of firms with high contracting incentives to capitalize and overstate brand values. Thus, there could be substantial differences in the extent of bias or error in brand valuations of firms with different levels of contracting incentives, i.e., brand asset measures might not be reliable. The stock price reaction during the 21 days surrounding the first announcement of brand recognition is significantly positively associated with the recognized brand amount. However, the brand coefficient is only a small fraction of what would be expected if markets did not impute any value to brands before firms recognized them. Few previous value-relevance studies have examined intangible assets recognized in financial statements, and none have examined the effects of contracting incentives on the reliability of the reported values of intangible assets.

Does the Capitalization of Intangible Assets Increase the Predictability of Corporate Failure?

2011 ◽  
Vol 25 (1) ◽  
pp. 41-70 ◽  
Author(s):  
Stewart Jones
Keyword(s):  
Default Risk ◽  
Predictive Power ◽  
Intangible Assets ◽  
Value Relevance ◽  
Extended Period ◽  
Failure Model ◽  
Statistical Association ◽  
Corporate Failure ◽  
Wide Range ◽  
Reporting Environment

SYNOPSIS: The value relevance of intangible assets is now well documented in the literature, leading to calls for standard setters to adopt more flexible reporting rules for these assets. In this study, I evaluate the merits of intangibles capitalization from a bankruptcy and default risk perspective, which has not been previously considered in the literature. The study is conducted in a unique reporting environment, where managers have had considerable discretion to capitalize a wide range of intangibles over an extended period. Three main results are reported. First, failing firms capitalize intangible assets more aggressively than non-failed firms over the 16-year sample period, but particularly over the five-year period leading up to firm failure. Second, drawing on the accounting choice literature, I find that managers’ propensity to capitalize intangible assets has a strong statistical association with earnings management proxies, particularly among failing firms. Finally, voluntary capitalization of intangibles has strong discriminating and predictive power in a firm failure model, even after controlling for several other factors.

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