An Empirical Analysis of Factors Affecting Prices of Intangible Assets: A Preliminary Testing in Consumer Durables Sector

Pavel Svačina

Prague Economic Papers, 2015, vol. 2015, issue 3, 354-363

Abstract: In the last few decades, a valuation of intangible assets is an activity of particular importance, not only because of growing number of transactions with intangibles but for accurate financial reporting as well. In this discipline, a special area is dedicated to the research of different factors that affect the value of intangibles. Royalty rate, a price of the licensed intangible, is a typical measure of an intangible asset's value. This research paper aims at testing empirically selected factors that have been identified by theoretical literature as well as by licensing practice as relevant in determining the level of royalty rates. For this purpose, a multi-factor linear regression model is built using the latest possible sample of licensing transactions from consumer durables industry from 2002 to 2006. The authors make tests of dependent variable (royalty rate) on financial factors as well as on factors coming from different provisions of licensing agreements. Based on a sample of 67 transactions, the financial factors revealed themselves to be statistically negligible, while some license provisions, in particular the extent of rights granted and the license term appeared to be highly significant in determining the royalty rate level.

Keywords: valuation; intangible assets; intellectual property rights; licensing; valuation approach; royalty rates; value factors; empirical study (search for similar items in EconPapers)
JEL-codes: D45 G12 G32 L24 O34 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.18267/j.pep.523

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