Intangible assets and value creation
Supp/2007 , p 346..353
Author(s):
Nicoleta RADNEANTU
Keywords:
Intangible assets, value creation, globalization, knowledge-based economy, intellectual capital, evaluation
Abstract:
The success of companies no longer depends upon production facilities, financial capital, and ownership, but more and more upon immaterial values, known as intangible assets. Such assets include not only relationships with business partners, brand awareness and new business ideas, but also know-how, corporate culture, and the ability to innovate. One of the major problems with today’s accounting systems is that they are still based on transactions, such as sales. The successful development of a drug creates considerable value, but actual transactions, such as sales, may take years to materialize. Until then, the accounting system does not register any value created in contrast to the investments made into research and development, which are fully expensed. This difference, between how the accounting system is handling value created and is handling investments into value creation, is the major reason for the growing disconnect between market values and financial information.
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