The impact of intangibles on firms’ financial and market performance: UK evidence

Yasean A. Tahat (), Ahmed H. Ahmed and Mohammad M. Alhadab
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Yasean A. Tahat: Gulf University for Science and Technology
Ahmed H. Ahmed: South Valley University
Mohammad M. Alhadab: Al AL-Bayt University

Review of Quantitative Finance and Accounting, 2018, vol. 50, issue 4, No 7, 1147-1168

Abstract: Abstract This study provides empirical evidence about the effect of intangible assets on firms’ current and future financial and market performance by utilizing a sample the UK FTSE 150 nonfinancial companies. Generally, the findings of this examination reported a strong evidence on the role of intangibles in boosting firms’ performance. In particular, the results indicate that while goodwill (GW) does have a statistically positive effect on firms’ current and future performance, research and development (R&D) is only associated with firms’ future performance. The results of the current research is consistent with the market-based and resources-based theories which posits that intangible investments are the main driving factors of wealth creation in the long-run; Specifically, R&D operations can create new technologies and products that would enhance firms’ performance and value. In addition, the results reveal that both GW and R&D can explain variations in firms’ financial performance measures suggesting that such investments can enhance firms’ earning leading to capitalization such earnings in the market value. Finally, the results of this research provide practical implication for policy makers and managers.

Keywords: Goodwill; Research and development; Performance; Valuation; UK (search for similar items in EconPapers)
JEL-codes: G19 M41 O16 O30 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:rqfnac:v:50:y:2018:i:4:d:10.1007_s11156-017-0657-6

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DOI: 10.1007/s11156-017-0657-6

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