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Accounting for intangibles – a critical review of policy recommendations

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  • Douglas Skinner

Abstract

I review and critically evaluate the arguments in favour of reforming current accounting and disclosure practices related to intangibles. I argue that the case for reform is actually rather weak. Proponents of reform provide little cogent evidence in support of claims that current practice is having adverse capital market effects. In fact, theory and evidence from corporate finance suggest that capital markets perform well in financing investments in innovative, high‐technology activities. I discuss why mandating additional disclosure in this area is unlikely to be successful and that proposals to recognise intangibles are also flawed.

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  • Douglas Skinner, 2008. "Accounting for intangibles – a critical review of policy recommendations," Accounting and Business Research, Taylor & Francis Journals, vol. 38(3), pages 191-204.
    • Handle: RePEc:taf:acctbr:v:38:y:2008:i:3:p:191-204
    DOI: 10.1080/00014788.2008.9663332
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    6. Sandra Brosnan & David O’Donnell & Philip O’Regan, 2019. "A performative exploration of the lifeworlds of human capital and financial capital: an intellectual capital case vignette," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 23(2), pages 321-344, June.
    7. Michal Novák, 2018. "The Quality of Disclosure under IAS 38 in Financial Statements of Entities Listed on PSE," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2018(2), pages 31-44.
    8. Hsu, Po-Hsuan & Taylor, Mark P. & Wang, Zigan & Xu, Qi, 2022. "Currency volatility and global technological innovation," Journal of International Economics, Elsevier, vol. 137(C).
    9. Stephen Penman, 2021. "Accounting for Risk," Foundations and Trends(R) in Accounting, now publishers, vol. 15(4), pages 373-507, November.
    10. Frédérique Evraert-Bardinet, 2017. "Intellectual capital, governance and institutional factors [Capital intellectuel, gouvernance et facteurs institutionnels]," Post-Print hal-01907521, HAL.
    11. Hossain, Ashrafee T. & Masum, Abdullah-Al & Xu, Jian, 2023. "COVID-19, a blessing in disguise for the Tech sector: Evidence from stock price crash risk," Research in International Business and Finance, Elsevier, vol. 65(C).
    12. Franko Milost & Ziga Cepar, 2018. "Could the Suitability of the Existing Accounting System be Argued?," Management, University of Primorska, Faculty of Management Koper, vol. 13(3), pages 213-225.
    13. Christopher Nobes & Christian Stadler, 2021. "Towards a Solution to the Variety in Accounting Practices of Extractive Firms under IFRS," Australian Accounting Review, CPA Australia, vol. 31(4), pages 273-285, December.
    14. Xiaolu Xu & Leo L. Yang & Joseph H. Zhang, 2022. "How do auditors respond to client firms’ technological peer pressure? Evidence from going‐concern opinions," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 49(9-10), pages 1553-1580, October.
    15. Smith, Julia A. & Cordina, Renzo, 2014. "The role of accounting in high-technology investments," The British Accounting Review, Elsevier, vol. 46(3), pages 309-322.
    16. Labidi, Manel & Gajewski, Jean François, 2019. "Does increased disclosure of intangible assets enhance liquidity around new equity offerings?," Research in International Business and Finance, Elsevier, vol. 48(C), pages 426-437.
    17. Xuejing Xie & Weiguo Zhang, 2023. "Should More Internally Generated Intangible Assets Be Recognized? A Commentary," Abacus, Accounting Foundation, University of Sydney, vol. 59(1), pages 6-31, March.
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    19. Thomas Bassetti & Lorenzo Dal Maso & Giovanni Liberatore & Francesco Mazzi, 2020. "A critical validation of the value added intellectual coefficient: use in empirical research and comparison with alternative measures of intellectual capital," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 24(4), pages 1115-1145, December.

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