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Júlio Martins () and Sandra Alves ()
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Júlio Martins: School of Economics of the University of Porto
Sandra Alves: ISCA – Institute Superior of Accounting of the University of Aveiro

Portuguese Journal of Management Studies, 2010, vol. XV, issue 1, 87-107

Abstract: This paper provides a literature review about the impact of intangible assets on the design of corporate financial and governance policies. Intangible assets show a set of characteristics – namely, high levels of risk and uncertainty, firm-specificity, human capital intensity, low observability and long-term nature - that make them markedly distinct from other categories of assets. These characteristics are likely to have a substantial impact on the levels of agency costs of debt (asset-substitution and under-investment problems) and equity (hidden action and hidden information problems), information asymmetry levels between investors and managers, transaction costs of debt and equity, and non-debt tax shields. The severity of these effects is likely to influence the maximisation of managers, shareholders and debt holders’ utility functions, which show different rewards, diversification levels, risk preferences and business expertise. Also, it seems likely that the severity of these effects varies across categories of intangible assets.

Keywords: Intangible assets; corporate financial; governance policies; agency theory. (search for similar items in EconPapers)
Date: 2010
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Handle: RePEc:pjm:journl:v:xiv:y:2010:i:1:p:87-107