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Intangibles mismeasurements, synergy, and accounting numbers : a note

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  • Ramond, Olivier
  • Casta, Jean-François
  • Bry, Xavier

Abstract

For the last two decades, authors (e.g. Ohlson, 1995; Lev, 2000, 2001) have regularly pointed out the enforcement of limitations by traditional accounting frameworks on financial reporting informativeness. Consistent with this claim, it has been then argued that accounting finds one of its major limits in not allowing for direct recognition of synergy occurring amongst the firm intangible and tangible items (Casta, 1994; Casta & Lesage, 2001). Although the firm synergy phenomenon has been widely documented in the recent accounting literature (see for instance, Hand & Lev, 2004; Lev, 2001) research hitherto has failed to provide a clear approach to assess directly and account for such a henceforth fundamental corporate factor. The objective of this paper is to raise and examine, but not address exhaustively, the specific issues induced by modelling the synergy occurring amongst the firm assets whilst pointing out the limits of traditional accounting valuation tools. Since financial accounting valuation methods are mostly based on the mathematical property of additivity, and consequently may occult the perspective of regarding the firm as an organized set of assets, we propose an alternative valuation approach based on non-additive measures issued from the Choquet's (1953) and Sugeno's (1997) framework. More precisely, we show how this integration technique with respect to a non-additive measure can be used to cope with either positive or negative synergy in a firm value-building process and then discuss its potential future implications for financial reporting.

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File URL: http://basepub.dauphine.fr/xmlui/bitstream/123456789/2196/2/SSRN-id860824.pdf
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Bibliographic Info

Paper provided by Université Paris-Dauphine in its series Open Access publications from Université Paris-Dauphine with number urn:hdl:123456789/2196.

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Length: 13
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Handle: RePEc:ner:dauphi:urn:hdl:123456789/2196

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Related research

Keywords: Financial reporting; accounting goodwill; assets synergy; non-additive measures; Choquet’s framework;

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References

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  1. Schmeidler, David, 1989. "Subjective Probability and Expected Utility without Additivity," Econometrica, Econometric Society, vol. 57(3), pages 571-87, May.
  2. March, James G., 1987. "Ambiguity and accounting: The elusive link between information and decision making," Accounting, Organizations and Society, Elsevier, vol. 12(2), pages 153-168, March.
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Cited by:
  1. Luc Paugam & Jean-François Casta, 2010. "Mesurer le capital organisationnel comme combinaison de ressources," Post-Print halshs-00494560, HAL.
  2. Paugam, Luc, 2011. "Valorisation et reporting du goodwill : enjeux théoriques et empiriques," Open Access publications from Université Paris-Dauphine urn:hdl:123456789/8007, Université Paris-Dauphine.

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