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.
According to the framework of knowledge economy, production and management of knowledge are key aspects of firm’s activity nowadays. Intellectual capital (IC) is the crucial factor for company survival in the market. Therefore it is vital to realize the way that this capital helps to create firm value. The purpose of this study is to test empirically one aspect of the relationship between intellectual capital components and business performance – the influence of intellectual capital structure on process of firm’s value added creation.
In order to analyze the process of intellectual capital transformation into the company value, the balanced panel data were collected. The sample consists of 64 British firms in 6 industries: retail and wholesale trade, machinery manufacture, chemicals manufacture, transport and telecommunications, oil extraction and producing. The panel includes five years: from 2005 to 2009. In order to obtain comprehensive data of chosen companies we used Amadeus Database (Bureau Van Dijk) as like as information from companies’ websites.
As far as there is no singular method of measuring value added by intellectual capital, we used five the most common methods: EVATM, MVATM, FGVTM, VAICTM, P/B ratio. We also used 14 variables as proxies for intellectual capital components.
The models are estimated with pooled cross-sectional OLS method.
Most strongly influence of the intellectual assets structure is reflected in VAIC and FGV. At the same time, EVA and P/B ratio have weak or not significant relationship with the structure of the intellectual assets portfolio.
It should also be noted that models with human capital proxy in the denominator show a significant positive dependency between a ratio of the intellectual capital components and value added.
Moreover consideration of the industry factor changes the results only slightly.
The present study advances our understanding of how to manage knowledge-related resources and contributes to effective investment management. The results confirm that structure of intellectual assets has quite stable linear effect on the value added created by the company. The effect is observed both in the short and long term period. Consequently, management should consider not only an accumulated volume of intellectual capital, but also the ratio between these components in order to increase company value.
This paper aims to analyse the contribution of intellectual resources to companies’ value. Most of the relevant empirical studies cover issues concerning the impact of intellectual capital on companies’ performance. This research is more specific and focuses on the unbiased estimation of intellectual resources’ contribution to their value.
The paper highlights an approach to decision-making for investments, identifying the costs for companies’ growth in value. The hedonic pricing approach is applied in order to test the hypotheses put forward in this study. One of the research questions is related to the assumption that the hedonic prices of intellectual resources differ according to external factors: country and industry. ANOVA is used to identify group differences among different national markets and industries. We have used fixed-effect regressions in order to avoid the endogeneity problem.
The authors revealed that hedonic pricing tool is valid for evaluating intellectual capital.
These proceedings represent the work of contributors to the 10th European Conference on Intangibles and Intellectual Capital (ECIIC 2019), held at the University of Chieti-Pescara on 23-24 May 2019. The conference is supported by SIDREA - the Italian Society of Accounting and Economia Aziendale (http://www.sidrea.it/) and is organized by the Department of Management and Business Administration (https://www.dea.unich.it/) headed by Professor Michela Venditti. The Conference Chair is Prof. Massimo Sargiacomo who was assisted by an organizing committee comprised of university professors and lecturers (Gianluca Antonucci, Christian Corsi, Antonio D’Andreamatteo, Francesco De Luca, Armando Della Porta, Manoel De Nicola, Daniela Di Berardino, Tiziana Di Cimbrini, Antonio Gitto, Lea Iaia, Luca Ianni, Lorenzo Lucianetti, Stefania Migliori, Ida Verna). PhD students from Accounting, Management and Business Economics (www.ambe.unich.it) at the University G.d’Annunzio of Chieti-Pescara also supported the organizational committee.
ECIIC is a well-established event on the academic research calendar and in its 10th year the key aim remains the opportunity for participants to share ideas and meet the people who hold them. The scope of papers will ensure an interesting two days. The subjects covered illustrate the wide range of topics that fall into this important and ever-growing area of research.
The opening keynote presentation is given by Prof. Martin Piber from the Leopold-Franzens-Universität, Innsbruck, Austria on the subject Managing (Intangibles) in times of VUCA (Volatility, Uncertainty, Complexity and Ambiguity). The second day of the conference will open with a keynote by Dr. John Dumay, from the Macquarie University, Sydney, Australia on the topic of 25 Years since Skandia: Critical reflections and projections. There will be an afternoon plenary Round Table Discussion led by Prof John Dumay, Prof Rosa Lombardi (SIDREA Secretary), University of Rome “La Sapienza”, Prof Stefano Marasca (SIDREA President), Marche Polytechnic University, Prof Martin Piber, University of Innsbruck and Prof Stefano Zambon (NIBR General Secretary), University of Ferrara, on the topic of Doing Research on Intangibles and Intellectual Capital: New Frontiers, Challenges and Future Scenarios.
With an initial submission of 96 abstracts, after the double blind, peer review process there are 40 Academic research papers, 3 PhD research papers and 3 work-in-progress papers published in these Conference Proceedings. These papers represent research from Australia, Austria, Bahrain, Brazil, Canada, Ecuador, Finland, Indonesia, Italy, Kazakhstan, Mexico, Pakistan, Poland, Portugal, Romania, Russia, South Korea, Switzerland and the USA.
Awareness of corporate value growth importance for all stakeholders as well as strengthening of intangible assets' role in the process of value creation makes it necessary to study the mechanism of intellectual capital transformation in the resulting indicators. However existing studies show poor development of methods for measuring of value created by the components of company's intellectual capital which makes analysis of the effectiveness of its use and impose limitations on value management. This paper is devoted to theoretical review and formulation of the problems for further analysis of value creation and destruction as a result of using both tangible and intangible assets.
“Intellectual capital” is a new term for key resources of a firm that enable it to compete on challenging market. Such assets as IT-systems, brand, employees’ knowledge and competencies are crucial for any company. However, large stocks of these resources do not lead to success automatically. The main purpose of this paper is to find out how interconnections between intellectual capital components contribute to company value. We test empirically linear and non-linear relationship between intellectual capital components and business performance with the assumption of their mutual influence on each other. From the theoretic point of view we combine the theory of intellectual capital with Value-Based Management concept and Resource-Based View in order to investigate the way that firm’s intellectual resources transform into its value.
There are two main problems when dealing with intellectual capital. The first one is intellectual capital evaluation. Previous papers on this topic are usually based on either questionnaire data or information from financial reports. However, questionnaire survey has significant disadvantage as the data obtained include subjective opinion of respondents. Financial reports lack for information about amount of firm’s intellectual capital. Therefore we propose another way to estimate intellectual capital components. Each of three components – human capital, structural capital and relational capital – is measured through the set of financial and non-financial proxy indicators which are collected from company’s reports and its web-site. Further these data are aggregated in first principal components through factor analysis to obtain the comprehensive view of intellectual capital structure. The second problem is to measure the value that has been created by intellectual resources. We chose two measures – market capitalization and market-to-book ratio.
Proposed method of analysis of intellectual capital is used on the sample of 59 firms from European countries with high level of economic and knowledge development. The sample covers five year period (from 2005 to 2009). We used the LS method to assess the direct and indirect relationships between intellectual capital and corporate value.
This study contributes in different ways. Firstly, it helps researchers and management to understand what synergetic effects between intellectual capital’s components take place. Secondly, it proposes an application of principal components method for investigating intellectual capital. Also it helps to recognize the level of homogeneity of intellectual capital elements that are combined in human capital, structural capital or relational capital and therefore are interpreted as describing one aspect of firm’s activity.
One of the most important activities of enterprises today is responsible entrepreneurship. Corporate social responsibility (CSR) activities can help to forge a stronger bond between employees and corporations, can boost morale, and can help both employees and employers feel more connected with the world around them. Moreover, the growing importance of this concept results from the fact that it is perceived as an effective tool for increasing competitiveness, improving the image of the company, or contributing to the generation of higher profits. In today’s world, an active commitment to social responsibility is becoming more common for a company.
CSR and Socially Responsible Investing Strategies in Transitioning and Emerging Economies is an essential reference source that identifies the scale and scope of implementation of CSR and socially responsible investing strategies and standards in companies operating in different transitioning and emerging economies as well as assessing the global effects of these activities. Featuring research on topics such as economic growth, responsible investing, and business ethics, this book is ideally designed for managers, executives, directors, corporate professionals, government officials, industry leaders, academicians, students, and researchers in the fields of international economics, international business, marketing, finance management, and public relations.
Value-based management concept regards corporate value growth for all stakeholders as the main company purpose which nowadays is primarily provided by intangible assets. However analysis of the process of converting intellectual capital (IC) and its components into the company financial performance is still a challenging research area. The main aim of the current study is to investigate the intellectual capital transformation into the company value on the basis of available information.