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The Linkage Between Intangibles And Profitability


  • Adriana Tiron Tudor

    (BabeÈ™-Bolyai University Romania)

  • Stefana Dima (Cristea)

    (Vasile Goldis Western University of Arad Romania)

  • Bogdan Dima

    (West University Timișoara Romania)

  • Raluca Valeria Ratiu

    (BabeÈ™-Bolyai University Romania)


The intangibles can be viewed as strategic assets, since their inclusion in the structureof the total assets allows economic entities to extract a ‘competiveness rent‘ and, thus, to enhancethe outcomes of their activity. This paper seeks to provide some empirical evidences for the effectsexercised by shocks emerged at the level of intangible-to-total assets ratio on profitability in the caseof 562 large companies listed on Frankfurt Stock Exchange and London Stock Exchange. We foundthat, for the full sample, there is a relatively steady relationship between this ratio and variousmeasures of profitability (Return on Assets - ROA, Return on Capital Employed - ROCE and GrossMargin). However, when the two markets as whole or different sectors are considered, there seem tobe various significant structural differences and some scale effects in the transmission of theintangibles‘ impact on profitability. Moreover, we check the robustness of the results in view of twocontrol variables: cash flow-to-operating revenue ratio appears to be the most robust, whereas theeffects of solvability ratio are less stable and vary across markets and sectors.

Suggested Citation

  • Adriana Tiron Tudor & Stefana Dima (Cristea) & Bogdan Dima & Raluca Valeria Ratiu, 2014. "The Linkage Between Intangibles And Profitability," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(16), pages 1-25.
  • Handle: RePEc:alu:journl:v:1:y:2014:i:16:p:25

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    More about this item


    intangibles; profitability;

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting


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