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

Jean François Casta (1) , Olivier J. Ramond (1) , Lionel Escaffre (2)

1 DRM - Dauphine Recherches en Management
2 GRANEM - Groupe de Recherche Angevin en Economie et Management

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.

Domaines: Gestion et management

Jean François Casta, Olivier J. Ramond, Lionel Escaffre. Intangibles Investments and Accounting Numbers Usefulness : an Empirical Study of the European Stock Market. 1st European Institute for Advanced Studies in Management (EIASM) : "Visualising, Measuring, and Managing Intangibles and Intellectual Capital "., Oct 2005, Ferrara, Italy. ⟨hal-00769333⟩