Why is it so Hard to Value Intangibles? Evidence from Investments in High-Technology Start-Ups
The paper uses a range of primary-source empirical evidence to address the question: ‘why is it to hard to value intangible assets?’ The setting is venture capital investment in high technology companies. While the investors are risk specialists and financial experts, the entrepreneurs are more knowledgeable about product innovation. Thus the context lends itself to analysis within a principal-agent framework, in which information asymmetry may give rise to adverse selection, pre-contract, and moral hazard, post-contract. We examine how the investor might attenuate such problems and attach a value to such high-tech investments in what are often merely intangible assets, through expert due diligence, monitoring and control. Qualitative evidence is used to qualify the more clear cut picture provided by a principal-agent approach to a more mixed picture in which the ‘art and science’ of investment appraisal are utilised by both parties alike.
|Date of creation:||Jun 2008|
|Date of revision:|
|Contact details of provider:|| Postal: School of Economics and Finance, University of St. Andrews, Fife KY16 9AL|
Phone: 01334 462420
Fax: 01334 462438
Web page: http://crieff.wordpress.com/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gelb, David S & Siegel, Philip, 2000. "Intangible Assets and Corporate Signaling," Review of Quantitative Finance and Accounting, Springer, vol. 15(4), pages 307-23, December.
- Li, Shu-Hsing & Balachandran, Kashi R, 2000. "Collusion Proof Transfer Payment Schemes with Multiple Agents," Review of Quantitative Finance and Accounting, Springer, vol. 15(3), pages 217-33, November.
When requesting a correction, please mention this item's handle: RePEc:san:crieff:0806. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (the School of Economics)
If references are entirely missing, you can add them using this form.