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Measurement and reporting of intangible assets: orientation of Indian practitioners

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Abstract

Research studies capturing the opinion of practitioners on issues related to the domain of intangibles are very rare. This study attempts to highlight the importance of practitioners as the significant stakeholders in the process of measuring and reporting intangible assets. The data were collected from 164 top level practitioners from India. These practitioners included Chief Financial Officers, Cost and Works Accountants, Chartered Accountants, Companies Secretaries, and Chartered Financial Analysts. A structured questionnaire was prepared for the purpose of data collection. Relationship between orientation towards intangible assets and selected variables has been modelled using binary logistic regression. Results indicate that intangible assets covered under intellectual property legal framework are considered more important than other intangible assets. Methods, such as return on assets and market capitalization, are the most popular techniques for measurement of intangible assets. An attempt has been made to examine the determinants of orientation towards intangible assets. Practitioners, being an important link in the measurement and reporting process, deserve greater attention from both the regulators and researchers. The study is an original piece of work. The study provides an insight into the practitioners’ perspective on reporting and orientation towards intangible assets.

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Authors and Affiliations

  1. Punjab Agricultural University, Ludhiana, India

    Sarishma Sharma & Khushdeep Dharni

Authors
  1. Sarishma Sharma
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  2. Khushdeep Dharni
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Correspondence to Khushdeep Dharni.

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Appendix

Appendix

Statement

Mean

SD

S1: Intangible resources increase the future value of a company in general

5.58

1.43

S2: Intangible resources increase the innovation capacity of a company in particular

5.16

1.67

S3: Investors perceive intangible investments as a signal for future corporate success

4.66

1.47

S4: The real value of firm is depicted by the intangible assets

4.14

1.69

S5: Intangible assets are important in creating competitive advantages

5.07

1.48

S6: It is not possible to report accurate information on intangibles

4.80

1.91

S7: It is difficult to measure the value of intangible assets

4.70

1.79

S8: Adequate methods for measurement of intangibles are not available

4.82

1.73

S9: Mismeasurement of intangibles deteriorates the information content of key financial statement items such as earnings and stock prices

4.92

1.64

S10: Significant portion of market value of firms comes from intangible assets

4.29

1.75

S11: Quality human resources in an organisation have a major role to play in increasing the value of the companies

5.62

1.34

S12: Measurement of intangibles would be useful if it is followed by immediate management of intangibles

5.28

1.25

S13: Size of firm is relevant in the successful implementation of a system for reporting on intangibles

4.95

1.46

S14: Firms report only those intangible assets in their financial statements that tend to fulfil the accounting criteria for assets recognition

5.27

1.45

S15: Voluntary disclosure practices vary across sectors/industries

5.32

1.32

S16: Voluntary disclosure practices are adopted in order to disseminate different varieties of quantitative intangible asset information

4.68

1.43

S17: Voluntary disclosures on intangibles assist in diversification and expansion decisions

4.81

1.40

S18: Reporting systems should provide information on human assets

5.69

1.30

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Sharma, S., Dharni, K. Measurement and reporting of intangible assets: orientation of Indian practitioners. Decision 47, 125–135 (2020). https://doi.org/10.1007/s40622-020-00240-y

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