Value-Relevance of Intangibles and Intellectual Capital Disclosure on Market-to-Book Value Ratio: A Longitudinal Multilevel Regression of German DAX Firms

26 Pages Posted: 29 Jan 2017

See all articles by Robert Rieg

Robert Rieg

Aalen University

Ute Vanini

Fachhochschule Kiel: University of Applied Sciences

Date Written: April 30, 2015

Abstract

Despite the importance of intellectual capital (IC), accounting standards are conservative concerning the capitalization of IC as assets. Thus, intangible-intensive firms disclose additional IC information, e.g. in their annual reports. The market-to-book value (MBV) ratio is regarded as an indi¬cator for IC not included in a firm’s balance sheet. If IC disclosure is value-relevant, we might assume that the level of IC disclosure impacts a firm’s MBV ratio. Thus, we empirically analyze the relations between firms’ IC disclosure and their MBV ratio for 60 German listed firms over a five year period with multilevel regression and path analysis. On a firm level, we find no evidence for a significant influence of IC disclosure on the MBV ratio. Instead, the MBV ratio level is influenced by the level of intangibles, R&D intensity, return and stock market index. Thus, standard-setting authorities should develop guidelines to improve the quality and value-relevance of IC disclosure.

Keywords: value-relevance, intangibles, intellectual capital (IC) disclosure, market-to-book value (MBV) ratio, multi-level regression, empirical study

JEL Classification: C21, G14, M41, Q34

Suggested Citation

Rieg, Robert and Vanini, Ute, Value-Relevance of Intangibles and Intellectual Capital Disclosure on Market-to-Book Value Ratio: A Longitudinal Multilevel Regression of German DAX Firms (April 30, 2015). Available at SSRN: https://ssrn.com/abstract=2906636 or http://dx.doi.org/10.2139/ssrn.2906636

Robert Rieg

Aalen University ( email )

Germany

Ute Vanini (Contact Author)

Fachhochschule Kiel: University of Applied Sciences ( email )

Sokratesplatz 1
Kiel, 24149
Germany

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