- Title
- The value relevance of intangible assets: evidence from the Hong Kong stock market
- Creator
- Zhou, Joe Chibing
- Resource Type
- thesis
- Date
- 2016
- Description
- Professional Doctorate - Doctor of Business Administration (DBA)
- Description
- This research examines the value relevance of book intangible assets, namely the goodwill and identifiable intangible assets, to the market value of public firms listed on the Hong Kong Stock Exchange (HKEx) by using data from 2005 to 2012. This was a period which witnessed a convergence to the International Financial Reporting Standards (IFRS) and the International Accounting Standards (IAS) by the HKEx, and covers the course of the global financial crisis in 2008. The findings employing the assets-based model of Landsman (1986), suggest that, on average, both the book goodwill and the identifiable intangible assets are value relevant to the market values of the listed firms. However, the market tends to recognize goodwill but not identifiable intangible assets. Moreover, the findings of this research show that the value relevance of the intangible assets were influenced by the global financial crisis in 2008. Based on separate analyses for the period of 2005 to 2008 and for the period of 2009 to 2012, respectively, it is concluded that the market perceived goodwill differently before and after the 2008 global financial crisis, while the perception of identifiable intangible assets remains the same. To further explain, the study presents evidence that goodwill had a positive relationship with the market values before the global financial crisis, whereas goodwill was insignificantly associated with the market values of the listed firms after the global financial crisis. In contrast, identifiable intangible assets were negatively related to the market values of the listed firms in the periods of both pre- and post-global financial crisis. Despite this, it is uncertain as to why this phenomenon happened in the Hong Kong stock market, and presumably can occur in other stock markets as well. One possible reason may be the limitations of the accounting of intangible assets, according to the IFRS and the IAS, which was applied by all the listed firms in the Hong Kong Stock Exchange. The IFRS 3 and IAS 38 emphasise fair value instead of cost should be counted for intangible assets and aim to provide better and meaningful information to the market. However, there are still many limitations on the treatment and measurement of intangible assets. According to IFRS 3, goodwill is under annual impairment test, while most of the identifiable intangible assets are amortized. In other words, the carrying amount of the goodwill can be accounted in accordance with the actual performance of the listed firms, while most of the identifiable intangible assets are amortized based on their initial recognized amount, without re-measuring in the carry-forward years, no matter whether the operation of the company is good or not. Besides, the self-created intangible assets cannot be recognised, but might exist. These limitations of the accounting of intangible assets may affect the market investors’ predictions of the market values of the listed firms. In this connection, it is required that the regulators of the stock market and the International Accounting Standards Board (IASB) find a more reliable way of disclosing and measuring intangible assets, such that market investors can better rely on the incremental information disclosed by public listed firms.
- Subject
- Hong Kong stock market; intangible assets; Hong Kong Stock Exchange; value relevance
- Identifier
- http://hdl.handle.net/1959.13/1314654
- Identifier
- uon:22794
- Rights
- Copyright 2016 Joe Chibing Zhou
- Language
- eng
- Full Text
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| Thumbnail | File | Description | Size | Format | |||
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| View Details Download | ATTACHMENT01 | Abstract | 55 KB | Adobe Acrobat PDF | View Details Download | ||
| View Details Download | ATTACHMENT02 | Thesis | 582 KB | Adobe Acrobat PDF | View Details Download |