As intangible assets have become increasingly important (Zingales, 2000), the importance of physical assets for company performance has decreased over the last few decades. Intangibles refer to companies' assets that lack a physical embodiment. They can be defined as “any factors of production or specialized resources that permit the company to earn cash flows in excess of the return on tangible assets” (Simon and Sullivan, 1993, p. 31). Intangible assets can take various forms and may be partly protected by legal rights. Knowledge assets, which are technology-related intangibles, are accumulated through investments in research and development (R&D) and may be protected through intellectual property (IP) rights such as patents or utility models (e.g., Hall, 1993b; Hall et al., 2005). Brand assets1 belong to market-based intangibles and can be built through advertising investments and be protected through trademarks2 (e.g., Mendonça et al., 2004; Srivastava et al., 1998). Besides technology- and marketbased assets, intangibles can also occur in other domains such as human capital, partnerships, or supplier relationships (Lev, 2001). As intangible assets are important in various company operations and processes, it becomes clear that they have the potential to “augment the earning power of a firm's physical assets” (Simon and Sullivan, 1993, p. 31). According to Ross (1983), assets reported in accounting strongly deviate from the ‘real’ value of a company, its market value. That is because the latter also encompasses intangible assets largely not captured by accounting measures.
KeywordsIntellectual Property Financial Market Intangible Asset Trade Mark Brand Equity
Unable to display preview. Download preview PDF.