L. C. Hunter (Intellectual Property Research Institute of Australia, The University of Melbourne and School of Business and Management, University of Glasgow) Elizabeth Webster () (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne) Anne Wyatt (UQ Business School, University of Queensland)
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This paper aims to show how firms account for expenditure on their intangible investments and how this influences their decision making processes. Evidence from our survey of 614 large Australian companies show that (1) firms do not systematically identify and separate expenditures on intangible investment from expenditures on tangible investment and operating expenditures; and (2) this leads to an information gap that adversely affects the firm's internal processes for evaluating the decision to invest in intangibles. The paper builds a deductive argument for the use of the general purpose financial reporting system (GAAP) to separate and report the expenditures on intangibles by corporations in a way that is consistent and comparable across firms and over time. Our evidence suggests that investment decisions by management and investors, where intangibles are involved, are likely to be based more on rules-of-thumb than objective evidence.
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Paper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number
wp2009n12.
Length: 39 pages Date of creation: May 2009 Date of revision: Handle: RePEc:iae:iaewps:wp2009n12
Contact details of provider: Postal: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Victoria 3010 Australia Phone: +61 3 8344 2100 Fax: +61 3 8344 2111 Email: Web page: http://www.melbourneinstitute.com/ More information through EDIRC
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