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October 20, 2008

Possible Research areas within Intangible Assets

From my preliminary literature review I have found the following aspects concerning Intangible Assets within both Accounting and Marketing Journals, although I am still unclear which strand of business I wish to pursue for this project.

From the accounting standpoint, “…the fair value of tangible assets [in the old days,] was routinely determined and the difference was simply thrown into the balance sheet as goodwill.”[1] Nowadays the markets are focussing more on the origination of this non-financial measure and their differing treatments such as for internally generated intangibles or post-acquisition balance sheets goodwill. Historically the accounting profession has had the capitalisation of intangibles as the centre of debate to determine its scope, valuation methodologies and widespread acceptance by the capital markets. The production of IAS 38 and its revisions during 2008 provides the key definitions, recognition criteria, measurement methodology and disclosure requirement governing intangible assets in financial accounts. Such a standard has been the result of the on-going convergence projects of the two of the world’s major accounting standards boards: IASB and FASB. A possible research focus would mean I start from the development of goodwill and intangible assets within the accounting profession and how the standards have evolved under the various named boards (ASB, FASB and IASB). I could then focus on a specific type of intangible or narrow it down to a specific industry and do some case-studies or survey type analysis. The research could focus on the purpose of valuation of intangibles via the cost, income or market approaches, whether for tax purposes, litigation purposes, corporate planning or defensive strategies in light of take-over bids or for any other commercial purposes that may arise in businesses.

On the other hand, the marketing profession has focussed on defining the “nature and substance,”[2] of specific intangibles types (such as brands, customer loyalties, employee equity, etc.) to focus on the construct in order to clearly define its role for marketing managers and value it accordingly. Thus, the roadmap is much clearer after defining specific intangibles and subsequently valuing them as a result. A basic literature review revealed vast amounts of information concerning specific type of intangibles such as brands, intellectual properties, employee assets, customer loyalty and so on. In this respect, I could not narrow my approach myself to restrict myself on any specific type of intangible and therefore you may enlighten me with some leads as to where I may begin if I were to pursue this side of intangibles.

An alternative approach to “intangible” research is within the capital markets. I could focus on the efficient market hypothesis to test stock trading strategies to the level of intangibles in a specific industry sector. This strand of research would demand first a literature review of the various stock-trading strategies and subsequently refining the thesis question. Again I haven’t done much research in this strand of intangibles, but could dig deeper to refine the topic.

A final note on intangibles: research on intangibles is quite a complex one as illustrated an extract from a literature review.[3]

The different classifications are rather confusing for practitioners who want to apply the concept in practice. However, it is important to realize that the concept of intangible assets is discussed from various perspectives, including accounting, strategy, human resource management, information systems, knowledge management, among others (Marr, 2004), and these different perspectives can lead to different emphasis in the definitions (Marr et al., 2003).

Some possible ambiguous terminology or phrases that I came across while I was conducting the basic literature review included:

International Valuation Standards Committee (IVSC)

“Royalty Relief”

Brand valuation

Brand strategy

Effect of brand equity on business performance

Brand switching behaviour

Value relevance of intangible assets

Book “Valuing Intangible Assets” by Reilly and Schweihs (1999)



[1]David Haigh 2008. VALUATION: Setting a standard of value. Brand Strategy, September 8, 38. http://www.proquest.com/ (accessed October 19, 2008).

[2] L. Wood, Brand value: the future. The Journal of Brand Management 5 4 (1998), pp. 245–255.

[3] Marr, B. and C. Adams, The Balanced Scorecard And Intangible Assets: Similar Ideas, Unaligned Concepts. Measuring Business Excellence. 8 (3) 2004 pp. 18-27


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