Endogenous Value Creation: Managerial Decisions on Intangibles

Management Research Review, Vol. 40 Issue: 4, pp.410-428, https://doi.org/10.1108/MRR-01-2016-0026

Posted: 25 Jan 2018

See all articles by Elena Shakina

Elena Shakina

National Research University Higher School of Economics

Mariya Molodchik

National Research University Higher School of Economics, Perm Campus

Ángel Barajas

National Research University Higher School of Economics, SPB; National Research University Higher School of Economics - International Laboratory of Intangible-driven Economy

Date Written: 2017

Abstract

Purpose This study aims to explore value creation through intangibles in corporations, taking into consideration the endogenous nature of managerial decisions. It is stated that intangibles bring extra information asymmetry into a company and make managers and investors’ goals less aligned.

Design/methodology/approach A theoretical model is elaborated and empirically tested on the assumption that managers, while investing in intangibles, simultaneously make a company competitive and attractive to investors. The authors use a conceptual model of endogenous value creation to test how intangibles affect outperforming of a company and provoke the expectations of investors. The research is carried out on a sample of more than 1,650 European companies covering the period from 2004 to 2011. Structural equation modelling is applied for the purposes of empirical analysis.

Findings The authors reveal a diverse impact of intangibles on outperforming of a company measured by economic value added and its ability to create market value. The study discovers that managers are prone to indicate positive signals to investors rather than create sustainable competitive advantages.

Practical implications This research emphasizes on the particular importance of awareness of policymakers, namely, companies’ top managers, about the outcomes of their decisions. Decision-making in public companies should involve as much deliberation as possible about the potential impact of what is decided.

Originality/value This work contributes primarily to the field of corporate finance in companies that use intangibles. The endogenous process of value creation is modelled and tested. As a result, a number of essential problems in agent relationships in intangible-intensive corporations are discovered.

Keywords: Intangibles, Intellectual Capital, Value Creation, Structural Equation Modelling (SEM), Investment Attractiveness

Suggested Citation

Shakina, Elena and Molodchik, Mariya Anatolievna and Barajas Alonso, Ángel, Endogenous Value Creation: Managerial Decisions on Intangibles (2017). Management Research Review, Vol. 40 Issue: 4, pp.410-428, https://doi.org/10.1108/MRR-01-2016-0026, Available at SSRN: https://ssrn.com/abstract=3104515

Elena Shakina

National Research University Higher School of Economics ( email )

Studencheskaya str., 38
Perm, Perm krai 614070
Russia

Mariya Anatolievna Molodchik

National Research University Higher School of Economics, Perm Campus ( email )

Studencheskaya street, 38
Perm, Perm 614017
Russia

HOME PAGE: http://www.hse.ru

Ángel Barajas Alonso (Contact Author)

National Research University Higher School of Economics, SPB ( email )

3A Kantemiroskaya
Saint Petersburg, 194100
Russia

HOME PAGE: http://www.hse.ru/en/staff/barajas

National Research University Higher School of Economics - International Laboratory of Intangible-driven Economy ( email )

Lebedeva,27
Perm, Perm 614070
Russia

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