Investments in Technological and Business Digitalization: Development of Accounting as a Factor of Economic Security for Business Entities in the Context of New Industrialization

The article is devoted to the issues of reforming the investment costs accounting for the technological and managerial processes digitalization in the course of new industrialization. It outlines the factors for the accounting development, represents plans for the investment assets federal standards development, and evaluates their implementation. It formulates the key differences in the composition and recognition of costs that form the initial cost of digitalization objects. It features the issues of recognising software as part of intangible assets or expenses of the organization. The author analyses and criticise new norms of the introduced accounting standards that build up information about investment objects in the economic processes digitalization. The article also identifies the indicators of economic security formed on data on digitalization investments accounting and defines further directions for the development of accounting in terms of tangible and intangible investments.

The Productivity J-Curve: How Intangibles Complement General Purpose Technologies

General purpose technologies (GPTs) like AI enable and require significant complementary investments. These investments are often intangible and poorly measured in national accounts. We develop a model that shows how this can lead to underestimation of productivity growth in a new GPTs early years and, later, when the benefits of intangible investments are harvested, productivity growth overestimation. We call this phenomenon the Productivity J-curve. We apply our method to US data and find that adjusting for intangibles related to computer hardware and software yields a TFP level that is 15.9 percent higher than official measures by the end of 2017. (JEL E22, E23, G31, L63, L86)

The productivity and unemployment effects of the digital transformation: an empirical and modelling assessment

For the last 30 years, the economy has been undergoing a massive digital transformation. Intangible digital assets, like software solutions, Web services, and more recently deep learning algorithms, artificial intelligence, and digital platforms, have been increasingly adopted thanks to the diffusion and advancements of information and communication technologies. Various observers argue that we could rapidly approach a technological singularity leading to explosive economic growth. The contribution of this paper is on the empirical and the modelling sides. On the empirical side, we present a cross-country empirical analysis assessing the correlation between the growth rate of both tangible and intangible investments and different measures of productivity growth. Results show a significant correlation between intangible investments and both labor and total factor productivity in the period after the 2008 financial crisis. Similarly, both measures of productivity growth are correlated with a combination of both tangible and intangible investments which include information and communication technologies and software and database. These results are used to inform the enrichment of the agent-based macro-model Eurace that we employ to assess the long-term impact on unemployment of digital investments. Computational experiments show the emergence of technological unemployment in the long run with a high pace of intangible digital investments.

Real Effects of Intangibles Capitalization—Empirical Evidence from Voluntary IFRS Adoption in Japan

ABSTRACT This study examines how firm behaviors are affected by the voluntary adoption of International Financial Reporting Standards (IFRS) in Japan, which has expanded the scope for the capitalization of intangible assets compared with the Japanese Generally Accepted Accounting Principles. Prior research suggests that capitalization of intangibles is preferred by firms with larger intangibles and that it enables them to increase intangible investments. Using empirical data from Japanese IFRS adopters, this study analyzes the relationship between firms' intangible asset amounts and their voluntary adoption of IFRS. The results show that (1) the more intangibles firms possess, the more likely they are to adopt IFRS, and (2) once firms decide to adopt IFRS, their intangible assets increase compared with matched non-adopters. Additional analysis shows that this increase is partly attributable to an increased volume and value of mergers and acquisitions after IFRS adoption, suggesting that the real actions of the adopters changed.

COMPLEMENTARITY BETWEEN TANGIBLE AND INTANGIBLE CAPITAL: EVIDENCE FROM JAPANESE FIRM-LEVEL DATA

Using Japanese firm-level panel data spanning from 2000 to 2013, we estimate industry-level production functions that explicitly take into account the complementarity and substitutability between tangible and intangible capital. The estimation results show that tangible and intangible capitals are complementary in most industries although the degree of complementarity substantially varies across industries. We further find that the relation between tangible and intangible capital in the production function accounts for the relation between firm-level tangible capital and intangible capital investments. Namely, firms’ tangible investments are more strongly positively associated with intangible investments as the degree of the complementarity between the tangible and intangible assets becomes larger. These findings show the necessity to take into account the relation between the dynamics of tangible and intangible capital in terms of their complementarity for precisely understanding the mechanisms governing a firm’s growth.

Creating Financial Statements For Start-Ups

This paper represents the sample of entrepreneurs who are in the process of starting a business. At investigates the determinants of financial projections and statements in start-ups. The predictions information in economics is consistent. There is a positive association frequency of financial statement preparation concerning the use of outside funding, level competition, and venture scale. There are alternative influences and suggestions that benefit in reducing competition and uncertainty in fundamental variations to prepare financial statements. For instance, cash statements are more important for start-ups, and frequency varies among different financial statements with products in earlier stages of development and with greater competition. In contrast to this financial statements projections and regular forecasts of sales by start-ups are positively associated with the importance of intangible investments such as parents, research, and development. The start-ups in high –tech industries are used for projections.