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The effects of intangible assets on firm performance

Author

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  • Jannatul Ferdaous
  • Mohammad Mizanur Rahman

Abstract

Purpose - Using the resource-based view and knowledge-based view as theoretical backdrop, the purpose of this paper is to explore the relationship between intangible assets and firm performance. Design/methodology/approach - The firms’ audited annual reports were collected during the period of 2007–2017 from 49 listed manufacturing firms of four industries in DSE, Bangladesh. This inductive research uses panel data (fixed-effect) estimation technique for balanced panel data to measure, describe, and analyze the firm performance. Findings - After controlling some specific variables, the results reveal mixed behavioral effects of intangible assets on firm performance. Even if intangible assets trigger a significant rise in the firms’ EPS (a measure of financial performance), the firms cannot maximize shareholders’ wealth due to their poor performance in the stock market of Bangladesh. Practical implications - The proposed models could be important tools for managers to integrate intangible assets in their decision process. The proposed models could also be important tools for investors to select their portfolios that have a track record for continuous investment in intangible assets in an efficient and sustainable way. Originality/value - Intangible assets are largely absent from the firms’ balance sheet. Consequently, previous empirical research works struggled to measure and quantify the effects of intangible assets on firm performance. The study fills that gap in the understanding of intangible assets’ nature, measurement method, and their effects on firm performance.

Suggested Citation

  • Jannatul Ferdaous & Mohammad Mizanur Rahman, 2019. "The effects of intangible assets on firm performance," American Journal of Business, Emerald Group Publishing Limited, vol. 34(3/4), pages 148-168, October.
    • Handle: RePEc:eme:ajbpps:ajb-11-2018-0065
    DOI: 10.1108/AJB-11-2018-0065
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    Citations

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    Cited by:

    1. Mihaela Curea, 2023. "Intangible assets and resource allocation: insights from European companies," Journal of Financial Studies, Institute of Financial Studies, vol. 15(8), pages 86-105, November.
    2. Krivogorsky, Victoria & Mintchik, Natalia & Alon, Anna, 2023. "Accounting research in former Soviet bloc countries: Past trends and current and future developments," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 50(C).
    3. repec:fst:rfsisf:v:8:y:2023:i:15:p:86-105 is not listed on IDEAS
    4. Grzybek, Olga, 2023. "Are accounting choices for intangible assets informative or opportunistic? Evidence from Poland," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 51(C).

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