An evaluation methodology for the tangible and intangible assets of city-regions : the 6K1C framework

Together with hard and soft networks tangible and intangible regional assets play an important role in the knowledge-based development of competing city-regions. The aim of this paper, therefore, is to investigate the best ways of managing invaluable tangible and intangible assets of city-regions. The paper explores the importance of asset management of city-regions by giving special emphasis on their knowledge asset base. This paper develops and introduces a theoretical framework to conceptualise a new approach to articulate the strategic planning mechanism, so called the 6K1C framework. The 6K1C framework is part of the strategic planning process of continuous improvement of overall public sector performance. The framework provides a proactive check-list approach integrated for managing and harnessing tangible and intangible assets of the post-industrial city-regions.

Why aren't brand names regognized as intangible assets in the financial Statements? A study of the subjectivity of brand valuation

The goal of this paper is to determine and to quantify how subjective brand valuation is. To do so, we review the different valuation methods and apply the Hirose model to a sample of 20 US companies from the technology sector. Even if the results vary in function of the rankings we choose as a comparison, we may identify the trend that brands are usually overvalued in those rankings. It explains why internally generated goodwill (which includes brand names) is not recognized as an intangible asset in the financial statements.

The role of venture capitalists in the identification and measurement of intangible assets

The increase in the importance of intangibles in business competitiveness has made investment selection more challenging to investors that, under high information asymmetry, tend to charge higher premiums to provide capital or simply deny it. Private Equity and Venture Capital (PE/VC) organizations developed contemporarily with the increase in the relevance of intangible assets in the economy. They form a specialized breed of financial intermediaries that are better prepared to deal with information asymmetry. This paper is the result of ten interviews with PE/VC organizations in Brazil. Its objective is to describe the selection process, criteria and indicators used by these organizations to identify and measure intangible assets, as well as the methods used to valuate prospective investments. Results show that PE/VC organizations rely on sophisticated methods to assess investment proposals, with specific criteria and indicators to assess the main classes of intangible assets. However, no value is given to these assets individually. The information gathered is used to understand the sources of cash flows and risks, which are then combined by discounted cash flow methods to estimate firm's value. Due to PE/VC organizations extensive experience with innovative Small and Medium-sized Enterprises (SMEs), we believe that shedding light on how PE/VC organizations deal with intangible assets brings important insights to the intangible assets debate.

Value and proportions of intangible assets : A comparison between the private- and the public sector

Organizations within the public- and the private sector have different aims with their accounting. Privately held organizations often have the intention to make profit, while authorities within the public sector aim to provide citizens with different services. The difference between these two sectors is also visible in the legislation, where International Accounting Standards Board set the standards for privately held organizations and Ekonomistyrningsverket do the same for the public sector. Because of the larger demand by the society for knowledge and technology, included in the category intangible assets, these are more emphasized in the accounting for organizations. Intangible assets are although linked with complexity which is associated with the measurement. The purpose of this study is therefore to see whether there are any existing differences in how to measure and value intangible assets and internally generated ones between listed companies in the private sector and authorities operating in the public sector. This study is conducted with both a qualitative and quantitative perspective. The data collected for this study is secondary, and is gathered through samples of annual reports from different companies in order to be representative for the whole population. The main results of this study is that there are differences in the measurement and valuation of intangible assets dependent on which sector an organization operates within and this is not due to the standards and regulations. The differences are visible in the percentage change in value of intangible assets since they fluctuate more heavily in the private sector than in the public sector. Simultaneously, the proportions of internally generated intangible assets compared to intangible assets in general differ between the two sectors.

Knowledge-based strategic planning: harnessing (in)tangible assets of city-regions

Purpose – The aim of this paper is to investigate the ways of best managing city-regions’ valuable tangible and intangible assets while pursuing a knowledge-based urban development that is sustainable and competitive. Design/methodology/approach – The paper provides a theoretical framework to conceptualise a new strategic planning mechanism, knowledge-based strategic planning, which has been emerged as a planning mechanism for the knowledge-based urban development of post-industrial city-regions. Originality/value – The paper develops a planning framework entitled 6K1C for knowledge-based strategic planning to be used in the analysis of city-regions’ tangible and intangible assets. Practical implications – The paper discusses the importance of asset mapping of cityregions, and explores the ways of successfully managing city-regions’ tangible/intangible assets to achieve an urban development that is sustainable and knowledge-based. Keywords – Knowledge-based urban development, Knowledge-based strategic planning, Tangible assets, Intangible assets, City-regions. Paper type – Academic Research Paper

Fair value accounting for non-current assets and audit fees: Evidence from Australian companies

We investigate the association between asset revaluations of non-current assets and audit fees, using a sample of ASX 300 companies from the years 2003–2007.We report that there is a significant increase in the audit fees paid when non-financial assets (PPEs, investment properties and intangible assets) are measured at fair values. Moreover, we provide evidence that an independent valuer or appraiser significantly weakens the positive association between asset revaluations and audit fees. Furthermore, companies whose noncurrent assets are revalued upwards and those that revalue their non-current assets upwards every year have significantly higher audit fees. Additional tests provide empirical evidence that the strength of corporate governance has a moderating effect on the level of audit fees. This study contributes to the ongoing debate on the role of fair value accounting. The findings suggest agency costs associated with fair value estimates may offset the benefits from the use of fair value accounting.

The impact of livestock assets among indigenous communities: findings from a comparative model in Bolivia

Measuring poverty has occupied a lot of space in the development discourse. Over the years a number of approaches have been offered to capture the experience of what it means to be poor. However, latterly such approaches often ignore core assets. Indeed, the comparative impact of livestock vs. other core assets such as land and education on poverty has not been well explored. Therefore, the authors created an 'asset impact model' to examine changes to both tangible and intangible assets at the household level, with a particular focus on gender and ethnicity among communities residing in the Bolivian Altiplano. The simple model illustrates that for indigenous women, a 20 per cent increase in the livestock herd has the same impact on household income as increasing the education levels by 20 per cent and household land ownership by 5 per cent. The study illustrates the potential role of a productive, tangible asset, i.e. livestock, on poverty reduction in the short term. The policy implications of supporting asset-focused measures of poverty are discussed.

Small and medium enterprises sourcing software as a service – a dynamic perspective on IS capabilities

Software as a Service (SaaS) is a promising approach for Small and Medium Enterprises (SMEs) firms, in particular those that are focused on growing fast and leveraging new technology, due to the potential benefits arising from its inherent scalability, reduced total cost of ownership and the ease of access to global innovations. This paper proposes a dynamic perspective on IS capabilities to understand and explain SMEs sourcing and levering SaaS. The model is derived from combining the IS capabilities of Feeny and Willcocks (1998) and the dynamic capabilities of Teece (2007) and contextualizing it for SMEs and SaaS. We conclude that SMEs sourcing and leveraging SaaS require leadership, business systems thinking and informed buying for sensing and seizing SaaS opportunities and require leadership and vendor development for transforming in terms of aligning and realigning specific tangible and intangible assets.

Valuation of family firms : the limitations of accounting information

This conceptual paper explores the extent to which reported accounting information captures unique family firm decision-making and intangible asset factors that impact financial value. We review the family firm valuation-relevant literature and identify that this body of research is predicated on the assumption that accounting information reflects the underlying reality of family firms. This research, however, fails to recognise that current accounting technology does not fully recognise the family firm factors in the book value of the firm or the implications for long run persistence of earnings. Thus, valuation models underpinning the extant empirical research, which are predicated on reported accounting information, may not fully reflect the intrinsic value of family firms. We present propositions on the interaction between accounting information, family factors and valuation as a road map for future empirical research with a discussion of appropriate methodologies.

Business in troubled waters : does adverse attitude affect firm value?

This paper investigates the relationship between US MNCs' valuations and anti-Americanism in countries where MNCs' foreign subsidiaries are located. We find that MNCs suffer value-destruction when they enter markets where people express severe anti-Americanism. However, we uncover that geographic diversification into these high anti-Americanism countries significantly increases firm value if the MNC has high levels of intangibles such as technological know-how and marketing expertise. Our findings are consistent with the notion that the advantages from internalizing the cross-border transfer of intangibles are greater when barriers to competition are higher.

On the allocation of a takeover purchase price under AASB1013

The purpose of this paper is to document and explain the allocation of takeover purchase price to identifiable intangible assets (IIAs), purchased goodwill, and/or target net tangible assets in an accounting environment unconstrained with respect to IIA accounting policy choice. Using a sample of Australian acquisitions during the unconstrained accounting environment from 1988 to 2004, we find the percentage allocation of purchase price to IIAs averaged 19.09%. The percentage allocation to IIAs is significantly positively related to return on assets and insignificantly related to leverage, contrary to opportunism. Efficiency suggests an explanation: profitable firms acquire and capitalise a higher percentage of IIAs in acquisitions. The target's investment opportunity set is significantly positively related to the percentage allocation to IIAs, consistent with information-signalling. The paper contributes to the accounting policy choice literature by showing how Australian firms make the one-off accounting policy choice in regards allocation of takeover purchase price (which is often a substantial dollar amount to) in an environment where accounting for IIAs was unconstrained.

Essays on Managing Knowledge and Work Related Wellbeing

This study explores the relationship between Intellectual Capital and Maintenance of Work Ability. Intellectual Capital is the central framework for analysing the increasing knowledge-intensiveness of business life. It is characteristic of Intellectual Capital that the intersection of human capital, internal structures and external structures is essential. Maintenance of Work Ability, on the other hand, has been the leading paradigm for Finnish occupational health and safety activities since the late 1980s. It is also a holistic approach that emphasises the interdependence of competence, work community, work environment and health as the key to work-related wellbeing. This thesis consists of five essays that scrutinise the focal phenomena both theoretically and empirically. The conceptual model that results from the first research essay provides a general framework for the whole thesis. The case study in the second essay supports a division of intangible assets into generative and commercially exploitable intangibles introduced in the first essay and further into the primary and secondary dimension of generative intangibles. Further scrutiny of the interaction of generative intangible assets in essay three reveals that employees’ wellbeing enhances the readiness to contribute to the knowledge creation process. The fourth essay shows that the MWA framework could benefit knowledge-intensive work but this would require a different approach than has been commonly adopted in Finland. In essay five, deeper analysis of the MWA framework shows that its potential results from comprehensive support of the functioning of an organisation. The general conclusion of this thesis is that organisations must take care of their employees’ wellbeing in order to secure innovativeness that is the key to surviving in today’s competitive business environment.

Increasing Knowledge Focus - a Means for Entrepreneurs to Remain on a Growth Path: Essays on the Role and Nature of Knowledge Management in Finnish SMEs (summary section only)

This study explores the role and nature of knowledge management (KM) in small and medium-sized companies (SMEs). Even though the role of knowledge as a competitive advantage is commonly recognized in the SME sector, almost no attention has been paid to the managing and developing of knowledge in SMEs. This thesis consists of three different sub-studies that were reported in four individual essays. The results of the questionnaire study indicate that nearly all companies that responded to the questionnaire (N = 108) found intangible assets, i.e. knowledge resources to be their main source of competitive advantage. However, only less than a third of the companies actively deal with knowledge management. The results also indicate a significant correlation between activity in knowledge management and sustainable organic growth of the company. The interview study (N = 10) explored the context and motives of the SMEs for managing their intangible assets, and the concrete practices of knowledge management. It turned out that KM facilitated change management, clarification of the vision and new strategy formulation. All the interviewed companies were aiming at improved innovation process, new ways of doing business and attaining an increased “knowledge focus” in their business. Nearly all also aspired to grow significantly. Thus, KM provides a strategy for these SMEs to guarantee their survival and sustainability in the turbulent markets. The action research was a process to assess and develop intangible resources in three companies. The experienced benefits were the clarification of future focus and strategy, creation of a common language to discuss strategic issues within the company, as well as improved balance of different categories of intangible assets. After the process all the case companies had developed in the chosen key areas. Thus, by systematic knowledge management the implementation of new strategic orientation (knowledge focusing) was facilitated. The findings can be summarized in two main points. First, knowledge management seems to serve the purpose of change, renewal and new strategic orientation in the SMEs. It also seems to be closely related to organic growth and innovation. All of these factors can be considered dimensions of entrepreneurship. Second, the conscious development of intangible assets can increase the balance of different categories of intangible assets and the overall knowledge focusing of business. In the case companies, this in turn facilitated the path to the improved overall performance.