Do Financial Analysts Get Intangibles?

Posted: 10 Nov 2003

See all articles by Eli Amir

Eli Amir

Tel Aviv University

Baruch Lev

New York University - Stern School of Business

Theodore Sougiannis

University of Illinois at Urbana-Champaign - Department of Accountancy


It is widely agreed that corporate financial reports provide deficient information about intangible assets. However, investors are exposed to substantial information beyond financial reports, such as managers' direct communications to capital markets and analysts' reports. We ask: To what extent do these nonfinancial report sources compensate for the intangibles-related deficiencies of financial statements?

To address this question we assume that analysts' forecasts of earnings reflect, among other things, the beyond-financial-report information we seek, and we use simultaneous equations to estimate the incremental information contribution of earnings forecasts over the information contained in financial reports, thereby isolating value-relevant information not available in financial report. We focus particularly on intangibles-related information, by comparing analysts' contribution for firms with and without R&D. We find that, to some extent, analysts do compensate for the intangibles-related information deficiencies of financial reports, but definitely not for all the deficiencies. Accordingly, we identify the "weakest links"-industries in which analysts don't get intangibles.

JEL Classification: M41, M44, G29, G12

Suggested Citation

Amir, Eli and Lev, Baruch Itamar and Sougiannis, Theodore, Do Financial Analysts Get Intangibles?. European Accounting Review, Vol. 12, No. 4, 2003. Available at SSRN:

Eli Amir (Contact Author)

Tel Aviv University ( email )

312 Recanati Bldg.
69978 Tel Aviv
+972 3 640-8510 (Phone)
+972 3 640-7738 (Fax)

Baruch Itamar Lev

New York University - Stern School of Business ( email )

40 West 4th Street, Suite 400
New York, NY 10012
United States
212-998-0028 (Phone)
212-995-4001 (Fax)


Theodore Sougiannis

University of Illinois at Urbana-Champaign - Department of Accountancy ( email )

360 Wohlers Hall
1206 South Sixth Street
Champaign, IL 61820
United States
217-244-0555 (Phone)
217-244-0902 (Fax)

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