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The Impact Of Intangible Assets On Financial And Governance Policies: A Literature Review

Author

Listed:
  • Júlio Martins

    (School of Economics of the University of Porto)

  • Sandra Alves

    (ISCA – Institute Superior of Accounting of the University of Aveiro)

Abstract

This paper provides a literature review about the impact of intangible assets on the design of corporate financial and governance policies. Intangible assets show a set of characteristics – namely, high levels of risk and uncertainty, firm-specificity, human capital intensity, low observability and long-term nature - that make them markedly distinct from other categories of assets. These characteristics are likely to have a substantial impact on the levels of agency costs of debt (asset-substitution and under-investment problems) and equity (hidden action and hidden information problems), information asymmetry levels between investors and managers, transaction costs of debt and equity, and non-debt tax shields. The severity of these effects is likely to influence the maximisation of managers, shareholders and debt holders’ utility functions, which show different rewards, diversification levels, risk preferences and business expertise. Also, it seems likely that the severity of these effects varies across categories of intangible assets.

Suggested Citation

  • Júlio Martins & Sandra Alves, 2010. "The Impact Of Intangible Assets On Financial And Governance Policies: A Literature Review," Portuguese Journal of Management Studies, ISEG, Universidade de Lisboa, vol. 0(1), pages 87-107.
    • Handle: RePEc:pjm:journl:v:xiv:y:2010:i:1:p:87-107
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    Citations

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    Cited by:

    1. Teplova, T. & Sokolova, T. & Teplov, A., 2017. "Intellectual Capital of Russian Companies as a Driver of Reducing the Cost of Debt," Journal of the New Economic Association, New Economic Association, vol. 36(4), pages 107-134.
    2. Zaroug Othman Mohammed & Mawih Kareem Al Ani, 2020. "The Effect of Intangible Assets, Financial Performance and Financial Policies on the Firm Value: Evidence from Omani Industrial Sector," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 14(3), September.
    3. Teplova, Tamara V. & Sokolova, Tatiana V., 2019. "Surprises of corporate governance and Russian firms debt," Journal of Economics and Business, Elsevier, vol. 102(C), pages 39-56.

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