 Intangibles and equity investorsJan Marton and Catalin Starica Chapter 12 in Handbook on Intangibles, 2026, pp 219-235 from Edward Elgar Publishing Abstract: Accounting standard setters and regulators define equity investors as the primary users of financial statements. In this chapter, we present recent research to summarize what is known about the usefulness of accounting for intangible assets and what investors do in the valuation of firms with intangibles. We confirm prior research and show that earnings are less useful in intangible asset intense firms. However, it is not due to a lack of capitalization of investments in intangibles. Instead, the lower usefulness of earnings is caused by the specific characteristics of high intangible asset firms. These firms have more volatile operations, more often have losses, and are smaller and younger compared to other firms. We also show that investors are able to adjust earnings to account for non-capitalization. In summary, capitalization is unlikely to make earnings more useful to investors. Instead, what would make financial statements more useful to investors is to require more detailed disclosures about future-oriented expenses relating to intangibles. Keywords: Capitalization of intangibles; Equity investors; Earnings; Economic characteristics; Future-oriented expenses; Disclosures (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:elg:eechap:22045_12 Ordering information: This item can be ordered from Access Statistics for this chapter More chapters in Chapters from Edward Elgar Publishing |
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