Endogenous Value Creation: Managerial Decisions on Intangibles
This study explores the value creation and agent conflict in a company that employs intangibles. The conceptual model of value creation is used to test how intangibles affect companies' outperforming and simultaneously build investors' expectations. The research is carried out using a sample of more than 1,650 European companies covering the period from 2004 to 2011. The study reveals the diverse impact of intangibles on the outperforming of a company by Economic Value Added (EVA) and its ability to create market value (MVA). The study discovers that managers are prone to set positive signals for investors rather than create sustainable competitive advantages. This work contributes primarily to the field of corporate governance in companies that employ intangibles. The issues to be considered when designing rules and incentives for proper communication between managers and investors that drive both outperforming and sustainable value creation are emphasized.