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Value-relevance of expensed and capitalized intangibles - a French survey

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Abstract

Significant difference exists between the market value and book value of firms. It could be attributed to the fact that intangible assets are not reflected in the financial statements. Our resuls indicate a statistical association between the "capitalized goodwill" and the market-to-book ratio, but do not indicate any statistical link with the "expensed intangible-intensity" nor the "capitalized intangible-intensity". These results support and contradict, for a part, the explanation on the loss of value relevance of financioal information, which could be due to the non-recognized intangibles in financial statements. However, the differing French and American accounting treatments of intangible expenditures may explain why these expenses are not taken into account by french capital markets when estimating the value of companies.

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Bibliographic Info

Paper provided by ESSEC Research Center, ESSEC Business School in its series ESSEC Working Papers with number DR 03022.

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Length: 45 pages
Date of creation: Jul 2003
Date of revision:
Handle: RePEc:ebg:essewp:dr-03022

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Postal: ESSEC Research Center, BP 105, 95021 Cergy, France
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Web page: http://www.essec.edu/
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Keywords: Intangible intensity; Market-to-Book ratio; Value-relevance; Goodwill; Capital markets; Ohlson model;

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  1. Josef Lakonishok & Andrei Shleifer & Robert W. Vishny, 1993. "Contrarian Investment, Extrapolation, and Risk," University of Chicago - George G. Stigler Center for Study of Economy and State 84, Chicago - Center for Study of Economy and State.
  2. Lustgarten, Steven & Thomadakis, Stavros, 1987. "Mobility Barriers and Tobin's q," The Journal of Business, University of Chicago Press, vol. 60(4), pages 519-37, October.
  3. Baruch Lev & Theodore Sougiannis, 1999. "Penetrating the Book-to-Market Black Box: The R&D Effect," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 26(3-4), pages 419-449.
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