Measuring the intellectual capital of italian listed companies

Titolo Rivista ESPERIENZE D'IMPRESA
Autori/Curatori William Forte, Gaetano Matonti, Giuseppe Nicolò
Anno di pubblicazione 2016 Fascicolo 2015/1
Lingua Italiano Numero pagine 33 P. 29-61 Dimensione file 297 KB
DOI 10.3280/EI2015-001002
Il DOI è il codice a barre della proprietà intellettuale: per saperne di più clicca qui

Qui sotto puoi vedere in anteprima la prima pagina di questo articolo.

Se questo articolo ti interessa, lo puoi acquistare (e scaricare in formato pdf) seguendo le facili indicazioni per acquistare il download credit. Acquista Download Credits per scaricare questo Articolo in formato PDF

Anteprima articolo

FrancoAngeli è membro della Publishers International Linking Association, Inc (PILA)associazione indipendente e non profit per facilitare (attraverso i servizi tecnologici implementati da CrossRef.org) l’accesso degli studiosi ai contenuti digitali nelle pubblicazioni professionali e scientifiche

The purpose of the paper is to match intellectual capital (IC) measurement methods and the reporting practices of a group of Italian listed firms, in order to examine potential convergence in practice. We focus on Italian listed firms because of the centrality of the family in their corporate governance setting and because of the weak relationship between these firms and the banks. This relationship could influence the market value of a firm as prior literature suggest analyzing German environment (Goebel, 2015). This study applies a holistic market-based approach, focused on the market-to-book ratio (MtB), to investigate the relationship between this ratio and potential determinants of the value of IC. Included in the determinants are intangible assets, as defined by IAS 38. We focus on the MtB as proxy of the intellectual capital because there is wider literature that highlights its importance in revealing the intellectual capital of a firm. Moreover, in Italy the literature has mainly investigated the intellectual capital under the network analysis (e.g. Bozzolan, 2003). To our knowledge, we do not find any study in the Italian context using the logit regression analysis (on a panel data) in order to investigate the relationship between the market to book ratio and some potential determinants of IC value, recognizing, however, that this ratio may depend also on other factors that are not IC components. Applying the holistic market capitalization approach we assume that a positive (latent) firm IC value occurs where the MtB ratio is greater than 1. This approach is applied to the reporting practices of Italian companies, as evidenced in their financial statement, in order to assess the visibility of intangible assets (IA) and the extent to which they explain the value of IC (Lev and Zambon, 2003). According to conservative and prudential accounting conventions, several factors may give rise to a mismatch between IC and IA, including: only partial alignment of accounting categories with IC terminology; the limited recognition of R&D expenses and internally generated intangibles as accounting assets; the retrospective character of valuation; and the virtual absence of "human capital" in conventional statements. However, even if such factors were to be removed from the firm-level valuation of IA, and the value of each asset could be explained using its market-value, the sum of these values will not capture the "holistic effect" of interactions between IC components which typically generate an overall value which is greater than the aggregate value of single estimates. Therefore, this study examines the relationship between MtB ratios, where they are greater than unity, and selected determinants drawn from the existing literature, including intangible assets, firm profitability, firm age, firm size, and so on, consistent with Morariu (2014), Goebel (2015), and Cheng and Liu (2015). Our empirical study is conducted for a panel of 148 Italian companies listed on the Milan Stock Exchange at the end of 2013, and draws upon annual reports for the financial years 2009-2013. We estimate a logistic regression model, in which the dichotomous dependent variable is given the value 1 if the firm MtB ratio exceeds 1, against independent variables including total and individual intangible assets, ROA, size, age, leverage, concentrated and family ownership, auditing, and industry type. Our results indicate a positive and moderately significant association between positive MtB and total intangible assets, a finding that is not consistent with Goebel (2015) who finds no association between LRVTB value (an MtB variant) and intangible assets. We argue that this result may be attributed both to the limitations of conventional accounting measures but also to investors’ perception of a value of firms greater than the sum of the value of each intangible asset recognized in the financial statements (that is the "holistic effect" of interactions among individual intangible assets). Further, we find a significant positive relationship between positive MtB and firm profitability (ROA). Finally, we find that IC value is significantly higher for firms which engage a Big 4 auditor. Thus, we argue that the balance sheet book value for such firms reflects greater conservatism in recognition criteria according to IAS 38, and less earnings management, than in firms audited by a non-Big 4 auditor. Moreover, the resulting significant negative relationships between the MtB ratio and firm age and size suggest that younger and smaller firms are able to implement more effective strategies of investment in intangible assets in order to create firm value (that is, IC value). Other factors that we find not to be significantly associated with IC value include leverage, recognized R&D expenses, patents and trademarks, goodwill, concentrated and family ownership, and industry membership. Our paper contributes to the literature on IC measurement in analyzing the appropriateness of MtB in order to detect the IC value. We focus on Italian context that differs from German environment for the character of corporate governance of Italian listed firms and for the predictive variables that include all components of intangible assets (e.g. goodwill, patents, trademarks, etc).;

Keywords:Intellectual capital, measurement, total intangible assets, listed firms, market to book ratio

  1. Andersen R., McLean R. (2000). Accounting for the Creation of Value. Canadian Institute of Chartered Accountants.
  2. Andriessen D., Tiessen R. (2000). Weightless wealth: find your real value in a future of intangible assets. London: Financial Times Prentice-Hall.
  3. Bhasin M.L. (2012). Measurement and disclosure of intellectual capital in a developing country: An exploratory study. Australian Journal of Business and Management Research, 2, 08: 63-75.
  4. Boekestein B. (2006). The relation between intellectual capital and intangible assets of pharmaceutical companies. Journal of Intellectual Capital, 7, 2: 241-253.
  5. Bontis N. (1998). Intellectual capital: an explanatory study that develops measures and models. In Management decision, 36, 2: 63-76. Bozzolan S., Favotto F., Ricceri F. (2003). Italian annual intellectual capital disclosure: an empirical analysis. Journal of Intellectual Capital, 4, 4: 543-558.
  6. Bozzolan S., O’Regan P., Ricceri F. (2006). Intellectual capital disclosure (ICD) A comparison of Italy and the UK. Journal of Human Resource Costing & Accounting, 10, 2: 92-113.
  7. Bramhandkar A., Erickson S., Applebee I. (2007, December). Intellectual capital and organizational performance: an empirical study of the pharmaceutical industry. In ECKM 2007: 8th European Conference on Knowledge Management 2007; Consorci Escola Industrial de Barcelona, Barcelona, Spain, 6-7 September 2007 (p. 147). Academic Conferences Limited.
  8. Brennan N., Connell B. (2000). Intellectual capital: current issues and policy implications. Journal of intellectual capital, 1, 3: 206-240.
  9. Brooking A. (1996), Intellectual capital: core assets for the Third Millennium Enterprise. London: Thomson Business press.
  10. Collier P.M. (2001). Valuing intellectual capacity in the police. Accounting, Auditing & Accountability Journal, 14, 4: 437-455.
  11. Crăciun L., Scriosteanu A. (2008). Cum se masoara capitalul intelectual?. Analele Universităţii din Craiova-Seria Ştiinţe Economice (XXXVI-3).
  12. Cronje C.J., Moolman S. (2013). Intellectual capital: measurement, recognition and reporting. South African Journal of Economic and Management Sciences, 16, 1: 1-12.
  13. Daum J.H. (2003). Intangible assets and value creation. John Wiley & Sons.
  14. Deng Z., Lev B., Narin F. (1999). Science and technology as predictors of stock performance. Financial Analysts Journal, 55, 3: 20-32.
  15. Donaldson T., Preston L.E. (1995). The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of management Review, 20, 1: 65-91.
  16. Dumay J.C. (2012). Grand theories as barriers to using IC concepts. Journal of Intellectual Capital, 13, 1: 4-15.
  17. Edvinsson L., Malone M.S. (1997). Intellectual capital: Realizing your company’s true value by finding its hidden brainpower (Vol. 225). New York, NY: HarperBusiness.
  18. Fincham R., Roslender R. (2003). Intellectual capital accounting as management fashion: a review and critique. European accounting review, 12, 4: 781-795.
  19. Forte W. (2013). Immobilizzazioni immateriali. In Il bilancio secondo i principi contabili internazionali IAS/IFRS: Regole e applicazioni. Introduzione di Lucio Potito. Terza edizione rivista, aggiornata e ampliata (Vol. 2). G Giappichelli Editore.
  20. Giunta F. (2008). Economia aziendale. Padova: CEDAM, 52-58; 424-428.
  21. Goebel V. (2015). Estimating a measure of intellectual capital value to test its determinants. Journal of Intellectual Capital, 16, 1.
  22. Guthrie J., Petty R., Ferrier F., Wells R. (1999), There is no accounting for intellectual capital in Australia: a review of annual reporting practices and the internal measurement of intangibles. Paper presented at OECD Symposium on Measuring and Reporting of Intellectual Capital. Amsterdam.
  23. Jahanian R., Salehi R. (2013). Managing Intellectual Capital in Organizations. International Journal of Human Resource Studies, 3, 4: 121.
  24. Kamath G.B. (2008). Intellectual capital and corporate performance in Indian pharmaceutical industry. Journal of intellectual capital, 9, 4: 684-704.
  25. Kaplan R.S., Norton D.P. (1996). The balanced scorecard: translating strategy into action. Harvard Business Press.
  26. Keenan J., Aggestam M. (2001). Corporate governance and intellectual capital: some conceptualisations. Corporate Governance: An International Review, 9, 4: 259-275. Kok A. (2007, January). Intellectual capital management as part of knowledge management initiatives at institutions of higher learning. In Proceedings of the 3rd International Conference on Intellectual Capital and Knowledge Management (p. 225). Academic
  27. Conferences Limited.
  28. Kuo-An Tseng, Ching-I Lin, Szu-Wei Yen (2015). Contingencies of intellectual capitals and financial capital on value creation: Moderation of business cycles. Journal of Intellectual Capital, 16, 1: 156-173.
  29. Harrison S., Sullivan P.H. (2000). Profitting form intellectual capital. Learning from leading companies. Journal of Intellectual Capital, 1, 1: 33-46.
  30. Lev B. (2001). Intangibles–management, measuring and reporting. Washington, DC: Brookings Institute.
  31. Lev B., Cañibano L., Marr B. (2005). An accounting perspective on intellectual capital. Perspectives on intellectual capital, 42-55.
  32. Lev B., Radhakrishnan S. (2005). The valuation of organization capital. In Corrado C., Haltiwanger J.C., Sichel D.E. (Editors). Measuring capital in the new economy, Chicago: University of Chicago Press, 73-99.
  33. Lev B., Radhakrishnan S., Zhang W. (2009). Organization capital. Abacus, 45, 3: 275-298.
  34. Lev B., Zambon S. (2003). Intangibles and intellectual capital: an introduction to a special issue. European Accounting Review, 12, 4: 597-603.
  35. Luthy D.H. (1998, August). Intellectual capital and its measurement. In Proceedings of the Asian Pacific Interdisciplinary Research in Accounting Conference (APIRA). Osaka, Japan, 16-17.
  36. Maditinos D., Chatzoudes D., Tsairidis C., Theriou G. (2011). The impact of intellectual capital on firms’ market vaòue and financial performance. Journal of intellectual capital, 12, 1: 132-151.
  37. Mard M.J., Hitchner J.R., Hyden S.D., Zyla M.L. (2002). Valuation for financial reporting: intangible assets, goodwill, and impairment analysis, SFAS 141 and 142. John Wiley & Sons.
  38. Marr. B., Schiuma G. (2001). Measuring and managing intellectual capital and knowledge assets in new economy organisations. In M. Bourne (edited by). Handbook of Performance Measurement. London: Gee.
  39. Meihami B., Varmaghani Z., Meihami H. (2014). Role of intellectual capital on firm performance (evidence from Iranian companies). International Letters of Social and Humanistic Sciences, 01: 43-50.
  40. Mehralian G., Rajabzadeh A., Reza Sadeh M., Reza Rasekh H. (2012). Intellectual capital and corporate performance in Iranian pharmaceutical industry. Journal of intellectual capital, 13, 1: 138-158.
  41. Newacheck P.W., Strickland B., Shonkoff J.P., Perrin J.M., McPherson M., McManus M., ... & Arango P. (1998). An epidemiologic profile of children with special health care needs. Pediatrics, 102, 1: 117-123.
  42. Meritum P. (2002). Guidelines for managing and reporting on intangibles. Fundación Airtel-Vodafone.
  43. Mitchell Williams S. (2001). Is intellectual capital performance and disclosure practices related?. Journal of Intellectual capital, 2, 3: 192-203.
  44. Mouritsen J. (2009). Classification, measurement and the ontology of intellectual capital entities. Journal of human resource costing & accounting, 13, 2: 154-162.
  45. Nahapiet J., Ghoshal S. (1998). Social capital, intellectual capital, and the organizational advantage. Academy of management review, 23, 2: 242-266.
  46. Nash H. (1998). Accounting for the future, a disciplined approach to value-added accounting. Richmond, Va. (Retrieved October 5, 2007, from: www. sprintmail. com). Nazari J.A., Herremans I.M. (2007). Extended VAIC model: measuring intellectual capital components. Journal of Intellectual Capital, 8, 4: 595-609.
  47. Onida P. (1960). Economia d’azienda. Unione tipografico-editrice torinese.
  48. Pantzalis C., Park J.C. (2009). Equity market valuation of human capital and stock returns. Journal of Banking & Finance, 33, 9: 1610-1623.
  49. Penman S.H. (2009). Accounting for intangible assets: There is also an income statement. Abacus, 45, 3: 358-371.
  50. Potito L. (2000). I beni immateriali nelle determinazioni d’impresa. In Aa.Vv., Le immobilizzazioni immateriali, Atti del Convegno del 23 giugno 1999, Cacucci, Bari.
  51. Quagli A. (1995). Introduzione allo studio della conoscenza in economia aziendale. Giuffrè.
  52. Quagli A. (2001). La gestione della conoscenza aziendale. Il caso Cap Gemini Ernst & Young. Knowledge Management. Milano: Egea.
  53. Ricceri F., Guthrie J. (2009). Critical analysis of international guidelines for the management of knowledge resources. Handbook on Research on Knowledge Intensive Organisations, Information Science Press, Hershey, PA.
  54. Roslender R. (2000). Accounting for intellectual capital: A contemporary management accounting perspective. Management Accounting, 78, 3: pp. 34-37.
  55. Pulic A. (1998, February). Measuring the performance of intellectual potential in knowledge economy. In 2nd McMaster Word Congress on Measuring and Managing Intellectual Capital by the Austrian Team for Intellectual Potential.
  56. Reed K.K., Lubatkin M., Srinivasan N. (2006). Proposing and testing an intellectual capital􀀀 based view of the firm. Journal of Management Studies, 43, 4: 867-893.
  57. Ruta C.D. (2009). HR portal alignment for the creation and development of intellectual capital. The International Journal of Human Resource Management, 20(3), 562-577.
  58. Seetharaman A., Helmi Bin Zaini Sooria H., Saravanan A.S. (2002). Intellectual capital accounting and reporting in the knowledge economy. Journal of Intellectual capital, 3, 2: 128-148.
  59. Serrat O. (2011). A primer on intellectual capital.
  60. Society of Management Accountants of Canada (SMAC) (1998). The management of Intellectual Capital. The issues and the practice. Issue Paper, 16, SMAC, Hamilton, 287.
  61. Stanciu C.M. (2008). Intellectual capital, a challenge to get the true and fair veiw. Accounting and Management Information Systems, 24, 72: 87.
  62. Stewart T.A. (1997). Intellectual capital: The new wealth of nations. New York.
  63. Sullivan P.H. (2000). Value driven intellectual capital: how to convert intangible corporate assets into market value. John Wiley & Sons, Inc.
  64. Sveiby K.E. (1997). The new organizational wealth: Managing & measuring knowledgebased assets. Berrett-Koehler Publishers.
  65. Sveiby K.E. (1997). The intangible assets monitor. Journal of Human Resource Costing & Accounting, 2, 1: 73-97.
  66. Tartaglia Polcini P. (2003). L’interpretazione economico-contabile delle risorse immateriali. Problematiche rappresentative e valutative nell’informazione esterna d’impresa.
  67. Yallwe A.H., Buscemi A. (2014). An Era of Intangible Assets. Journal of Applied Finance & Banking, 4, 5: 17-26.
  68. Van der Meer-Kooistra J., Zijlstra S.M. (2001). Reporting on intellectual capital. Accounting, Auditing & Accountability Journal, 14, 4: 456-476.
  69. Viganò A. (1976). Gli investimenti d’impresa in risorse umane: alcuni aspetti quantitativi di dinamica economica. A. Giuffrè.
  70. Villalonga B. (2004). Intangible resources, Tobin’s q, and sustainability of performance differences. Journal of Economic Behavior & Organization, 54, 2: 205-230. Wingren T. (2004). Management accounting in the new economy: from tangible and production focused to intangible and knowledge – driven mas by integrating BSC and IC. Managerial Finance.
  71. Youndt M.A., Subramaniam M., Snell S.A. (2004). Intellectual Capital Profiles: An Examination of Investments and Returns. Journal of Management studies, 41, 2: 335-361.
  72. Zanda G., Lacchini M., Oricchio G. (1993). La valutazione del capitale umano dell’impresa. Modelli qualitativi e quantitativi di logica economico-aziendale. Turin: Giappichelli.
  73. Zèghal. D., Maaloui A. (2010). Analysing value added as an indicator of intellectual capital and its consequences on company performance. Journal of intellectual capital, 11, 1: 39-60.

William Forte, Gaetano Matonti, Giuseppe Nicolò, Measuring the intellectual capital of italian listed companies in "ESPERIENZE D'IMPRESA" 1/2015, pp 29-61, DOI: 10.3280/EI2015-001002