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Intangibles Investments and Accounting Numbers Usefulness : an Empirical Study of the European Stock Market

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  • Jean François Casta

    (DRM - Dauphine Recherches en Management - Université Paris-Dauphine - CNRS - Centre National de la Recherche Scientifique)

  • Olivier Ramond

    () (DRM - Dauphine Recherches en Management - Université Paris-Dauphine - CNRS - Centre National de la Recherche Scientifique)

  • Lionel Escaffre

    () (Granem - Groupe de Recherche ANgevin en Economie et Management - UA - Université d'Angers - AGROCAMPUS OUEST - Institut National de l'Horticulture et du Paysage)

Abstract

Motivated by the recent works by Lev [2001b ; 2004] and Villalonga [2004], and the current debate surrounding the international financial reporting standard n°38 (i.e. IAS 38) adoption related to reported intangible investment issues, this study investigates whether European firms using national generally accounting principles (hereafter, GAAP) exhibit differences while considering the relationship between firm performance and reported intangible investment. Using a four-representative-European-country (i.e. France, Germany, Spain and U.K.) dynamic data panel, we investigate whether intangible accounting numbers in these different settings can be significantly linked, during the period 1993-2003, to the following firm performance triptych: financial, operational and competitive performance. Reported intangible investment is measured herein by three accounting proxies: the change in goodwill stock [see Griliches, 1981], the change in reported intangible assets stock [see Hall, 2000] and the research and development (R&D) expenditures.

Suggested Citation

  • Jean François Casta & Olivier Ramond & Lionel Escaffre, 2005. "Intangibles Investments and Accounting Numbers Usefulness : an Empirical Study of the European Stock Market," Post-Print hal-00769333, HAL.
  • Handle: RePEc:hal:journl:hal-00769333
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00769333
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    References listed on IDEAS

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    1. Robert E. Hall, 2001. "The Stock Market and Capital Accumulation," American Economic Review, American Economic Association, vol. 91(5), pages 1185-1202, December.
    2. Morck, Randall & Yeung, Bernard, 1991. "Why Investors Value Multinationality," The Journal of Business, University of Chicago Press, vol. 64(2), pages 165-187, April.
    3. Heckman, James J, 1978. "Dummy Endogenous Variables in a Simultaneous Equation System," Econometrica, Econometric Society, vol. 46(4), pages 931-959, July.
    4. repec:fth:michin:282 is not listed on IDEAS
    5. Stephen Lin, 2006. "Testing the Information Set Perspective of UK "Financial Reporting Standard No.3: Reporting Financial Performance"," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 33(7-8), pages 1110-1141.
    6. Oliver E. Williamson, 1967. "Hierarchical Control and Optimum Firm Size," Journal of Political Economy, University of Chicago Press, vol. 75, pages 123-123.
    7. McGahan, Anita M, 1999. "The Performance of US Corporations: 1981-1994," Journal of Industrial Economics, Wiley Blackwell, vol. 47(4), pages 373-398, December.
    8. Anne Cazavan-Jeny & Thomas Jeanjean, 2006. "The negative impact of R&D capitalization: A value relevance approach," European Accounting Review, Taylor & Francis Journals, vol. 15(1), pages 37-61.
    9. Nickell, Stephen J, 1996. "Competition and Corporate Performance," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 724-746, August.
    10. Lev, Baruch & Sunder, Shyam, 1979. "Methodological issues in the use of financial ratios," Journal of Accounting and Economics, Elsevier, vol. 1(3), pages 187-210, December.
    11. Villalonga, Belen, 2004. "Intangible resources, Tobin's q, and sustainability of performance differences," Journal of Economic Behavior & Organization, Elsevier, vol. 54(2), pages 205-230, June.
    12. Anderson, T. W. & Hsiao, Cheng, 1982. "Formulation and estimation of dynamic models using panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 47-82, January.
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