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Why is it so hard to value intangibles?

Reid, Gavin and Smith, Julia (2008) Why is it so hard to value intangibles? Discussion paper. University of St Andrews, St Andrews.

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Abstract

The paper uses a range of primary-source empirical evidence to address the question: ‘why is it to hard to value intangible assets?’ The setting is venture capital investment in high technology companies. While the investors are risk specialists and financial experts, the entrepreneurs are more knowledgeable about product innovation. Thus the context lends itself to analysis within a principal-agent framework, in which information asymmetry may give rise to adverse selection, pre-contract, and moral hazard, post-contract. We examine how the investor might attenuate such problems and attach a value to such high-tech investments in what are often merely intangible assets, through expert due diligence, monitoring and control. Qualitative evidence is used to qualify the more clear cut picture provided by a principal-agent approach to a more mixed picture in which the ‘art and science’ of investment appraisal are utilised by both parties alike.

Item type: Monograph (Discussion paper)
ID code: 39654
Keywords: venture capital, financial reporting , high technology, intangible assets, accounting information, Accounting
Subjects: Social Sciences > Commerce > Accounting
Department: Strathclyde Business School > Accounting and Finance
Related URLs:
Depositing user: Pure Administrator
Date Deposited: 09 May 2012 16:27
Last modified: 09 May 2012 16:27
URI: http://strathprints.strath.ac.uk/id/eprint/39654

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