Showing papers on "Intangible asset published in 2002"

Financial Development, Property Rights, and Growth

Abstract: The authors analyze how property rights affect the allocation of firms' available resources among different types of assets. In particular, they investigate empirically for a large number of countries whether firms in environments with more secure property rights allocate available resources more toward intangible assets and consequentially grow faster. The authors find that improved asset allocation due to better property rights has an effect on growth in sectoral value added equal to improved access to financing arising from greater financial development. The results are robust, using various samples and specifications, including controlling for growth opportunities.

Intellectual Capital and Firm Performance of U.S. Multinational Firms: A Study of the Resource-Based and Stakeholder Views

Abstract: The resource-based view of the firm maintains that firms achieve a sustainable comparative advantage and earn superior profits by owning or controlling tangible as well as intangible strategic assets The stakeholder view recommends that a better measure of financial performance than accounting profit is the total wealth created or net value added Accordingly, this study examines the relationship between a return on total assets based on net value added and the specific intangible asset of intellectual capital to test the resource view of the firm The results using a sample of US multinational firms are statistically significant in support of both the resource-based and stakeholder views

Knowledge Management: Philosophy, Processes, and Pitfalls

Abstract: Based on a survey of 317 firms and in-depth cases on six firms, this article examines the management of the most intangible asset of the firm—its knowledge. This article examines the sources, uses, and outcomes of knowledge and shows how successful firms acquire and absorb more information and know-how. More importantly, these firms have more effective decision-making processes that enable them both to create new knowledge and to apply this knowledge to generating more innovation in products and processes. Greater levels of innovation in turn lead to improved market and financial performance. This article identifies eight key lessons for knowledge managers and demonstrates how rather than attempting to manage knowledge, firms should measure the change in the innovative outputs that arise from their knowledge management strategies and practices.

The value of knowledge and the values of the new knowledge worker: generation X in the new economy

Abstract: States that in the new developing economy of the millennium knowledge is an asset that should be valued, developed and managed, since it is a component of the intellectual capital of an organization. Reveals that knowledge is increasingly being regarded as a corporate asset in an age when data and information help sustain competitive advantage. Remarks that knowledge is, however, an intangible asset and so managing it creates a number of challenges in the area of human resource development, especially when workers are more concerned with their employability. Concludes that if a company values knowledge it must value its knowledge workers.

The Valuation Implications of Employee Stock Option Accounting for Profitable Computer Software Firms

Abstract: We use the Ohlson (1995, 1999) and Feltham and Ohlson (1999) valuation models to investigate the market's perception of the economic effect of employee stock options (ESOs) on firm value for a sample of 85 profitable computer software companies. Our results suggest that the market appears to value these firms' ESO expense not as an expense but as an intangible asset (even after controlling for the endogeneity bias arising from the mechanical relation between ESOs and the underlying stock prices). However, we also find a conflict between: (1) the positive manner in which investors appear to value ESO expense, and (2) the negative relation between current ESO expense and future abnormal earnings. This conflict not only could be an artifact of the restrictiveness of the abnormal earnings forecasting equation we estimate, but it also calls into question whether investors assess correctly the effect of ESOs on profitable software firm value.

The determinants of research group performance.

Abstract: This paper explores the determinants of performance of research groups in the context of the emergence of knowledge as a key intangible asset. It focuses specifically on how best to configure knowledge producers for optimal effectiveness in the current research environment. It explores the under-researched area of the organization and management of research groups located in and at the interface of university research and focuses on medical and medical-related research groups. The discussion is embedded within the current debate concerning modes of organization in knowledge production. Factors identified with high-achievement are: strong leadership; finding, motivating and retaining talent; strategies of related diversification; strongly linked theory and practice and, in particular, network connectedness. Such groups exhibit an increasingly complex internal environment, facilitating a flexible response to an increasingly complex external environment. It finds evidence of Mode 2 working, with increasing use of collaborative strategies and some evidence of a thematic emphasis emerging, although to a lesser extent than the literature suggests, since participants are still working from a strongly disciplinary base. Driven by the more competitive environment, both intellectual and commercial forms of entrepreneurship are present. At the hub of this complex web of inter-related factors is network connectedness, which proves to be centrally facilitative in mobilizing the other necessary resources.

Methods and systems for trading of futures contracts for intangible assets

Abstract: Methods and systems for trading of future contracts for intangible assets are provided. The methods and systems allow traders to access information on intangible asset futures contracts and future contract funds and to execute their trades in a computer-based futures exchange. Intangible assets include future royalties or revenues from artistic works or future salaries of professionals, for instance. The futures exchange system provides real-time trading status on the futures contracts or funds as well as detailed information on contract terms. Quotes may be matched automatically by the futures exchange. Sensitivity analysis of various factors on the outcome of futures contracts valuation may be provided. Additionally, offer and contract terms for categories of intangible assets may be standardized in the futures exchange for trading simplification.

Method and system for valuing intellectual property

Abstract: An automated system and method for determining the value of an intangible asset or intellectual property and developing a fair remuneration structure for licensing or purchasing the intangible asset or intellectual property by comparison to a dissected database of prior licensing and sale transactions. Valuation determinants and remuneration structures from prior transactions are extracted, analyzed and weighted and loaded into a knowledge base. Remuneration structures are normalized and used to train predictive algorithms based on a market analysis of previous transactions. The algorithms are able both to learn from previous transactions and to assess the importance of particular valuation determinants in determining the value under particular circumstances. An equitable rate for a new transaction is determined by examining the knowledge base and varying the valuation determinants. An optional expert system and dynamic modeling environment are provided.

The application of intangible asset accounting and discretionary policy choices in the UK football industry

Abstract: This paper investigates the use of intangible asset accounting and the selection of accounting policies in the football industry, an environment where discretionary choices were available concerning accounting for transfer fees. Additionally, companies in this dynamic and socially influential industry are unique in recognising investments in human resources on the balance sheet. Proxies representing the level of tax costs, equity depletion, underwriter pressure and auditors used are found to have significant associations with policy selection. This contributes to the debate over the role of discretionary choices, particularly regarding the accounting treatment available for intangible assets, in financial reporting.

New Rules for German Professors

Abstract: In Germany, the "Inventor9s Law" has, in the past, granted German university professors an exemption from the standard legal obligation, known throughout industry, of notifying the employer of an invention. The inventor-professor was at the same time the sole beneficiary of any and all financial income achieved by the commercialization of the invention. It was frequently argued that, in essence, this old legislation was denying the German universities and, thereby, the German economy an economically valuable intangible asset. Thus, legislation has very recently abolished the so-called "professor9s privilege," with great financial and political consequences.

Um estudo exploratório do controle gerencial de ativos e recursos intangíveis em empresas brasileiras

Abstract: This study has for objective to evaluate, in three brazilian companies of the services sector, the importance granted by them to their intangible assets. For the purpose of this study, the body of intangible assets of a company is defined as composed of the technical competence of its workforce; its ability to transfer and incorporate knowledge; the quality level of its relationship with customers, suppliers and job market; and the intensity of its research and development effort. The importance of each intangible asset is verified by (1) the degree of presence of components of each asset; (2) the number of relevant managerial activities related to each asset; and finally (3) the number of frequently used performance indicators related to each intangible asset.

Technology evaluation system and method

Abstract: An evaluation system generating a predicted value of a technology is provided. The evaluation system is primarily based on the R&D Value and the Patent Value to generate the predicted value of a technology. The evaluation system comprises a first database, a second database, an intangible asset pricing device, a factor producing device, an input device, and an analytic device The first database stores a set of stock prices of each company of a group of reference companies. The second database stores a set of net asset values, corresponding to the set of stock prices of each company of the group of reference companies. The intangible asset pricing device produces a set of intangible asset predicted values of each company of the group of reference companies according to the set of stock prices and the set of net asset values of each company of the reference companies. The factor producing device, responsive to a first predetermined condition, divides the group of reference companies into N compared subgroups, and the factor producing device also produces a set of referred factors of each of the N compared subgroups according to the N compared subgroups and the set of intangible asset predicted values of each company of the group of reference companies. The input device is for inputting a predetermined time and a predetermined cost of the technology needed for launch. The analytic device then maps the technology to one corresponding subgroup of the N compared subgroups, and then the analytic device, according to the predetermined time, the predetermined cost and the set of referred factors of the corresponding subgroup, produces the predicted value of the technology.

Transparency Culture and Financial Communication

Abstract: The inter-company relationships are affected significantly by the information flows activated by the various players. The fact that a large number of relationships can be essentially ascribed to the sharing of part of the financial risk highlights the crucial role of financial communication. Financial communication can be an intangible asset of primary importance for corporate development. The achievement of such a goal requires the revision of rules and conduct to obtain messages in true accordance with proper financial corporate principles of truthfulness, clarity, and especially, transparency. Transparency is an essential requirement for the continuous refining of the convergence between management and information content, and the clarity of the documents periodically transmitted outside. Transparency should facilitate the establishment of a unitary, consistent system of conduct and messages focused on corporate financial dynamics.

Intangible asset deployment in technology-rich companies: how does innovation affect return on assets?

Abstract: This study seeks to characterise the nature and fundamental cause for the apparent persistent, systematic underutilisation of technology intangible assets worldwide. The effects of technology licensing on cash flow is examined, and the question is asked why, in the face of so much pressure to increase cash flows and advance the use of internally created technology, is technology licensing practised at such anaemic levels compared with other cash-generating activities? The problem may be due in part to the consistent failure on the part of most otherwise rational managers and scientists to view the IP assets under their control as financial assets. Stuck in an anachronistic legal mindset, they instead view their patents as static legal documents, locked up and brought out for use only in the event of litigation. This situation has taken and continues to take an enormous toll, both on the amount of cash that new technology would otherwise generate for its owners, and on the usage and dissemination of innovation worldwide.

The Relative Economic Performance of Foreign Subsidiaries in UK Manufacturing

Abstract: There is now considerable evidence to show that domestically-owned firms (DOEs) have lower levels of labour productivity than foreign-owned subsidiaries (FOSs) in UK manufacturing industry. In explaining these productivity differences, most studies refer to the firm-specific advantages which multinationals possess, allowing them to succeed in foreign environments. In fact, as Barrell and Pain (1997) point out, if foreign-owned assets are no more productive than those that are locally-owned, the rational for FDI, particularly among developed countries, disappears. Superior foreign-owned assets are also important from a policy viewpoint in that there is a perception that host countries can benefit from the potential for spillover effects to domestic firms. Given the importance of firm-specific advantages to FDI theory, it is surprising that there has been little attempt to directly measure these assets in studies of relative productivity performance.

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

Abstract: This paper investigates the longitudinal earnings value relevance of Australian firms for the period 1975 through 1999. There is evidence of a decline in earnings value relevance over this 25-year period, consistent with findings of US studies. However, only losses explain much of the decline, which is inconsistent with findings of US studies. In an attempt to reconcile this difference, intangible asset recognition is singled out as a likely discriminator since it is conjectured by some that immediate expensing of certain intangible assets significantly contributes to declining earnings value relevance. Results suggest earnings value relevance has declined for firms that don't recognise intangible assets (non-capitalizers) and there is weak evidence of decline for firms that recognise intangible assets (capitalizers). Additionally, after controlling for losses capitalizers have no change in (increasing) earnings value relevance and non-capitalizers have decreasing (no change in) earnings value relevance using R2 (earnings parameters) as a value relevance measure. Results are robust to various alternative explanations and different model specifications. For capitalizers in the 1990s, those that amortize generally have stronger value relevance than non-amortizers. Amortization and its change are most significantly associated with return for intangibles other than R&D and deferred costs. In some years, the level of amortization is significantly positive suggesting the market does not treat amortization as a period expense. The change is negative and significant in most years, suggesting amortization revisions reflect valuable information about future earnings.

The Value-Relevance of Network Advantages: The Case of E-Commerce Firms

Abstract: We show that network advantages constitute an important intangible asset that goes unrecognized in the financial statements. For a sample of e-commerce firms, we find that network advantages created by website traffic have substantial explanatory power for stock prices over and above traditional summary accounting measures such as earnings and book value of equity. When we allow network advantages to be endogenously determined by managerial actions, we find that at least part of the value-relevance of network effects stems from the presence of affiliate referral programs and higher media visibility. Network effects are most valuable to auction sites and portals. Network advantages are positively associated with one-year ahead and two-year ahead earnings forecasts provided by equity analysts.

The Valuation Implications of Employee Stock Option Accounting for Profitable Computer Software Firms

Abstract: We use the Ohlson (1995, 1999) and Feltham-Ohlson (1999) valuation models to compare the extent to which Accounting Principles Board Opinion 25: Accounting for Stock Issued to Employees (APB 25), Statement of Financial Accounting Standards No. 123: Accounting for Stock-Based Compensation (SFAS 123), and the Exposure Draft: Accounting for Stock-Based Compensation reflect the market's assessment of the effects of employee stock options on firm value for a sample of 85 profitable computer software firms. Findings from the SFAS 123 approach indicate the market appears to value ESO expense not as an expense but as an asset. Most notably, the results suggest that investors perceive that employee stock options create an intangible asset that they value more highly than other assets of the firm. The Exposure Draft approach, according to our findings, best captures the market's perception of the economic effect of employee stock options (ESO) on firm value for profitable computer software companies. However, we find a conflict in (1) the positive manner in which investors appear to value ESO expense, and (2) the negative relation between current ESO expense and future abnormal earnings. This conflict could be a an artifact of the restrictiveness of the abnormal earnings forecasting equation we estimate, although it also calls into question whether investors in profitable software companies assess correctly the effect of ESOs on profitable software firms value.

Tradable Environmental Pollution Credits: A New Financial Asset

Abstract: A new financial asset (Allotment Trading Unit or ATU) that allows a firm to pollute was issued to a number of Chicago firms in 2000 as part of a cap‐and‐trade model to reduce emissions in the Chicago area. A model of this market was developed to enable us to: 1.) Estimate equilibrium tradable credit prices and quantities and calculate compliance costs for comparison with traditional environmental regulation; 2.) Estimate the consequences for prices and quantities of introducing changing emitter costs; and 3.) Estimate the impacts on prices and quantities of changing market features such as auctioning tradable credits instead of a free allocation, introducing spatial constraints, and changing the emissions cap. The model's results on the price determination of this new financial asset are of interest to accountants and financial analysts. A dated bankable ATU credit has a one‐year life expectancy, but future tradable credits can be bought or sold for use at the appropriate future date. It is an intangible asset that should be disclosed, measured and valued. The valuation to place on this asset is an important research topic in finance and accounting and various valuation approaches are discussed to handle the short‐term and long‐term price paths.

Confucian connections in China

Abstract: In her book entitled, World Class: Thriving Locally in the Global Economy, Kanter (1995:22-3) identified the two dimensions associated with being ‘world class’. One, organizations must ‘meet the highest standards anywhere in the world in order to compete’; and two, the emergence of a social class, cosmopolitans, who are able to ‘command resources and operate beyond borders and across wide territories’. Kanter went on to state that the new social class or cosmopolitans must be rich in three intangible assets. The first is ‘concepts’, defined as the ‘best and latest knowledge and ideas’. The second intangible asset is ‘competence’, referring to the ‘ability to operate at the highest standards anywhere’. The third intangible asset is ‘connections’, that is ‘the best relationships which provide access to the resources of other people and organizations around the world’. Kanter referred to these three intangible assets as the three ‘Cs’ for thriving in the global economy. In this chapter, we will focus on the third ‘C’, connections. Specifically, we will examine connections in the context of doing business with the Chinese, in fact with countries which have been strongly influenced by the teachings of Confucius. These countries include China, Hong Kong, Taiwan, Japan and Korea. Collectively, they are referred to as Confucian societies.

A New Scorecard for Intellectual Property; Pay Attention to Purchase Price Allocations in Financial Statements

Abstract: Auditors and finance executives are charged with helping companies make sure they appropriately disclose intangible assets, acquired either separately or as part of a business combination, to financial statement users. Now that FASB Statement no. 141, Accounting for Business Combinations, and Statement no. 142, Accounting for Goodwill and Other Intangible Assets, are in effect, companies can no longer combine goodwill with other intangible assets such as intellectual property (IP) on their balance sheets. Instead they must report goodwill and intangibles separately, must disclose intangible asset classes--such as patents and trademarks--and must provide the estimated useful lives of such intangible assets in financial statement footnotes. (For more information see "Say Good-bye to Pooling and Goodwill Amortization," JofA, Sep.01, page 31). By specifically identifying patents, trademarks, trade secrets, licensing agreements and other IP involved in a business combination as intangible assets that require a separate valuation apart from goodwill, FASB has highlighted the importance of IP in the allocation process (see "FASB Changes Accounting for IP on Balance Sheet"). As a result, auditors and corporate finance executives must be aware of a significant distinction in the accounting treatment of business combinations: While goodwill no longer will be amortized, certain intangibles (those with finite lives) must be. Since companies generally are reluctant to report an item that may have a negative impact on earnings, such as depreciating intangibles, CPAs must recognize when a purchase price allocation might raise questions from the SEC to ensure their clients are not surprised after the business combination is completed. Unless companies can support their accounting decisions, regulators will question allocating the entire purchase price to goodwill rather than part of it to IP and other intangible assets. Here's some guidance for CPAs on how to handle these IP accounting issues to ensure the success of a business combination. YOU DON'T WANT THIS SITUATION A hypothetical computer software company, with the help of its CPA firm, recently completed the acquisition of a smaller competitor. Although the fair value of the target's acquired net assets was $500 million, the board agreed on a $900 million purchase price given the target's superior technology, sales growth and leading market position. The company expected the acquisition target to create a presence in a new market virtually overnight. The company's board was particularly convinced of the merits of the deal after learning it would not have to amortize the massive amount of goodwill the purchase created due to recent accounting changes. The accounting treatment would ensure continued earnings growth after the acquisition, a major goal for the board. Six months after the deal, however, the board learned about an SEC inquiry into the accounting methodology the company had used in the transaction. Not wanting to amortize, the company had allocated only a small portion of the purchase price to intangibles and treated most of the $400 million premium paid over the fair value of the acquired net assets as goodwill in its financial statements. The SEC challenged the allocation of the purchase price between goodwill and intangibles and determined an additional $80 million of it should have gone to the target's patent portfolio and therefore been treated as intangible assets, not goodwill. The change will force the company to reduce earnings estimates and restate its financials. As the board convenes, the CEO and CFO must explain what happened and why. HOW TO IDENTIFY INTELLECTUAL PROPERTY When the company prepared its financial statements, it made a common mistake and attributed too much of the purchase price premium to goodwill. CPAs and other members of the team should have identified the patent portfolio as an intangible asset that would need to be amortized. …

Intangible assets, multinational firms and joint ventures: the case of financial services in developing economies

Abstract: This note illustrates a recent empirical phenomenon, which warrants a re-examination of the intangible asset theory of multinational enterprises (MNEs). It analyses two case studies of financial services: credit cards and insurance products in a developing economy. The case studies show that in the case of joint ventures between local firms, and MNEs in a developing economy, it is a large local bank that provides the brand name while MNEs provide the back-end (tangible) technical-support. The analysis also brings forth fresh insights on the issue of joint ventures, especially in the context of financial services in an emerging economy.

Intellectual Asset Measurement of Construction Corporation's Knowledge Management

Abstract: It expresses well result measurement system's the importance that 'It can not manage that can not measure.' In this way, there is no expressivity that express difficulty. While Corporation's tangible asset is possible measuring by specific amount of money of financial statement or loss and gain statement etc, Method of corporation's intangible asset measurement is much had been introduced, but some one is not presenting objective frame. This research did size of construction corporation's intangible Asset(Intellectual Asset) through knowledge asset storing accumulation model(XYZ model) that present in LG economy research institute so that do quantification objectively. Through this, can presume construction corporation's intrinsic value level.

Value Based Organisations: the Value Chain Approach

Abstract: The student will be able to: differentiate between alternative perspectives of value — the customer and the organisational views; discuss the importance of value-in-use as a concept for effective planning; understand the development of value chain theory and its application to strategic analysis.