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An Empirical Analysis of Factors Affecting Prices of Intangible Assets: A Preliminary Testing in Consumer Durables Sector

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  • Pavel Svačina

Abstract

In the last few decades, a valuation of intangible assets is an activity of particular importance, not only because of growing number of transactions with intangibles but for accurate financial reporting as well. In this discipline, a special area is dedicated to the research of different factors that affect the value of intangibles. Royalty rate, a price of the licensed intangible, is a typical measure of an intangible asset's value. This research paper aims at testing empirically selected factors that have been identified by theoretical literature as well as by licensing practice as relevant in determining the level of royalty rates. For this purpose, a multi-factor linear regression model is built using the latest possible sample of licensing transactions from consumer durables industry from 2002 to 2006. The authors make tests of dependent variable (royalty rate) on financial factors as well as on factors coming from different provisions of licensing agreements. Based on a sample of 67 transactions, the financial factors revealed themselves to be statistically negligible, while some license provisions, in particular the extent of rights granted and the license term appeared to be highly significant in determining the royalty rate level.

Suggested Citation

  • Pavel Svačina, 2015. "An Empirical Analysis of Factors Affecting Prices of Intangible Assets: A Preliminary Testing in Consumer Durables Sector," Prague Economic Papers, Prague University of Economics and Business, vol. 2015(3), pages 354-363.
    • Handle: RePEc:prg:jnlpep:v:2015:y:2015:i:3:id:523:p:354-363
    DOI: 10.18267/j.pep.523
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    References listed on IDEAS

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    1. Manuel Trajtenberg, 1990. "A Penny for Your Quotes: Patent Citations and the Value of Innovations," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 172-187, Spring.
    2. Mariko Sakakibara, 2010. "An empirical analysis of pricing in patent licensing contracts," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 19(3), pages 927-945, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    valuation; intangible assets; intellectual property rights; licensing; valuation approach; royalty rates; value factors; empirical study;
    All these keywords.

    JEL classification:

    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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