THE VALUE RELEVANCE AND MANAGERIAL IMPLICATIONS OF INTANGIBLES: A LITERATURE REVIEW 1

Abstract

This paper presents a survey of the economics, business and accounting literature, which has focused on the analysis of intangibles. First, it addresses the analysis of the economic nature of intangibles, discusses several alternative definitions, and reviews the classifications proposed in the literature as well as the accounting criteria for the recognition, valuation and depreciation of intangible assets. Then, a discussion on the relevance of specific intangible assets for firm valuation is presented, with special attention to the risks of underestimating the value of intangibles. The paper then delves on the managerial implications of intangibles, discussing the relevance of organizational innovation and the strategic management of intangibles. Finally, several proposals for the disclosure of information on intangibles are reviewed.