Int. j. econ. manag. soc. sci., Vol(4), No (2), February, 2015. pp.

237-240

TI Journals

International Journal of Economy, Management and Social Sciences

www.tijournals.com

ISSN:
2306-7276

Copyright 2015. All rights reserved for TI Journals.

An Investigation into the Relationship between the Market Value of

Intangible Assets in Tehran Stock Exchange
Abbas Talebbeydokhti *
Department of Management, Qeshm Branch, Islamic Azad University, Qeshm, Iran.

Iman Ghasemizade
Department of Management, Qeshm Branch, Islamic Azad University, Qeshm, Iran.

Kobra Dehghani
Department of Management, Qeshm Branch, Islamic Azad University, Qeshm, Iran.

Motahare Hosseinpour
Department of Management, Qeshm Branch, Islamic Azad University, Qeshm, Iran.
*Corresponding author: f_shab2007@yahoo.com

Keywords

Abstract

Intangible assets
Market value
Connection value
Abnormal operating income
Olson model Fetelman

Today's highly competitive economy of intangible assets is the source of value creation for the Companies,
but accounting standards has been always a challenge in identifying and reporting of these assets. The purpose
of this study was to investigate the relationship between intangible assets in companies and its market value.
The research is descriptive and the research variables include intangible assets, (Independent), market value
(dependent), operational assets, operational liabilities, financial assets, financial liabilities, and inflation,
normal and abnormal operating earnings (control). All companies listed on the stock market and securities in
the period 2001 to 2010 in the sample were comprised of 114 companies. The test results show that there is a
positive and meaningful relationship between intangible assets and market value. The test results also showed
a significant positive relationship between the unusual market value of a company's operating income in the
company's stock. Managers of their firms should have more consideration to intangible assets because in
terms of creating value for the company's shareholders are the property. It should also take note of the fact
that today's economy is an economy of intangible assets. This study was demonstrated for the first time in Iran
and the importance of asset is an indicative of Company's intangible assets.

1.

Introduction

If we take a meticulous attention into the world, the fact could be found that the world today is definitely different from the world in the past.
The characterization of world today could be noted in global economy, mass production, excess capacity in most markets, competition based on
time, volume, and mass of information and communication efficiency, knowledge, and increasing power of customer. All these properties
demonstrate the Integration of environmental dynamism and complexity of international markets, manufacturing and service companies and
institutes. The main question rose in this atmosphere that what the secret to survival and success in competitive markets today is.
If the companies could define human capital, and organizational information appropriate indexes for measuring the size of designs and
eventually adopt the strategies and goals, then, they would enjoy the increase of profits. According Kaplan and Norton, the most important
reason for measuring the intangible assets is that if an institute be able to adopt the human power (their employees skills and knowledge) with
informational assets (the management system of human power and institutional capital), then the institute would be able to innovate such a
strong competitive advantage that no competitor could copy that innovation.
Given the growing importance of intangible assets in "new economy", we can (regarding the potential problems) argue that all intangible assets
(purchased or made by the Company) shall be, in the form of Financial, (fair value) detected and reported in order to maximize the value of these
forms of the relations. The valued relation of financial report is the ability to approve or modify the capital of the company by investors. So if the
stock is traded between capital holders, the market price should reflect the summary of the agreement in venture capital expectations of value of
the company. So the value relevance (and reliability) can be determined by the financial relationship between accounting numbers and market
value of a company. It should be noted that the primary purpose of financial statements is the valuation of equity; however, significant
concentration is on the US commission of Securities, and Accounting Standards Board of Investment Law makers. In the mid 80s, there had
been discussions for evaluating the reliability and quantifying the value of intangible assets. The scandal came to Dot Com and, consequently,
concerns became more extensive in the areas of accounting. Then, accountants were looking for a way to explain the difference between the
"book value" of a company and its market value.
Accounting Standards Board announced in this regard that "the traditional financial reports cannot show the drives for value creation in the New
Economy". Traditionally, companies identify two types of assets, tangible assets and intangible assets. While the method for evaluating the
tangible assets (such as land, equipment, housing, etc.) are well developed, intangible assets are difficult to assess and are almost impossible to
manage.
This study examined the relationship between intangible assets and value of Companies in Tehran Stock Exchange. It deals with the relationship
between intangible assets reported in the balance sheet of the company and their market values in order to answer the questions if intangible
assets have the relational value. In other words, whether the intangible assets reported by the company have a significant relation with the stock
market. And whether capital holders know the value of intangible assets? This means whether the company's market pay their full attention to
valuation of intangible assets. Lydia Olivieraet al (2010) investigate the value of identified relevance of intangible assets of international
standards which recently adopted by Portugal and have found that the reported good will and intangible assets are associated with the company's
stock price; however, the relation intangible assets have fallen after the adoption of international standards.
Buleron et.al (2011), in a study entitled "Do the International Standards provide better information about intangible assets in Europe? Compare
the results of the use of international financial reporting standards, standards of international accounting and generally accepted principles of
companies which are members of the European exchange. The results show that intangible assets reported under International Financial

Abbas Talebbeydokhti *, Iman Ghasemizade, Kobra Dehghani, Motahare Hosseinpour

238

International Journal of Economy, Management and Social Sciences Vol(4), No (2), February, 2015.

Reporting standards are Intangible assets under accepted principles of public area and have a greater burden to explain the price and return in
formation.

2.

Research methods

This study was descriptive - co relational. The ultimate goal of study is to investigate the co relational comparison between the two factors,
intangible assets and the market value of companies which have been defined in terms of the related variables.

3.

Research hypotheses

The main hypothesis: there is a significant positive relationship between the amount of intangible assets and the market value of listed in Tehran
Stock Exchange
Test model of hypotheses and variables of the research
First, this model should facilitate a detailed and principled analysis of the companys value. Second, this model should use the accounting
information. Third, this model should make it possible for assessing the relevance and reliability of reported information. The model presented
by Feldman and Olson (1995) has these features. However, the analysis of accounting items (goodwill and identifiable intangible assets)
operational component of net assets and the book value of equity, BVE is a linear function of the components that research will test and
considering the fact that the financial companies are removed, we expect that the NFA is a small sample of the BVE. Thus, a model is used
which separates the net assets of those operational components of intangible assets (goodwill and identifiable intangible assets).
MVEt= 1 + 2 (NOA INT)t + 3GWt + 4 IDt+ 5NFAt + 6AOEt +
(1)
Here is the fixed 1, 2 to 6 are the estimated regression coefficients and , is a disturbing statement.
According to this model, the variables to test the hypotheses of this study are divided into three groups of independent variables, dependent and
control.
Independent variable
In this study, the independent variable is the identifiable intangible assets of the companies which are extracted from the annual audited financial
statements.
Identifiable intangible assets: Intangible total assets reported in accordance with accounting standards (net of amortization of good will)
company.
Dependent variable
The dependent variable in this study is the company's market value which is calculated by the price per share multiplied by the number of shares
in the company on the last day of the financial year.
Control Variables
In order to control other possible factors affecting the market value of firms, numbers of visible features of the company are
consideredas"control variables". Thus, the control variables, operational assets, operational liabilities, financial assets, financial liabilities,
inflation, normal and abnormal operating income is used.
Table 1. how to measure the variables
NOA

Net operating

NFA

Net financial assets

AOE

Abnormal operating income

Operating assets debt action

operating assets = current assets - cash - short term investments + (land, property and equipment - related accumulated
depreciation) + long-term equity method investments + intangible assets
Operating liabilities = total debt + preferred stock debt financing
Current portion of long-term debt + financial debt = long-term debt
Financial assets-financial liabilities
Financial assets=Total assets-operating assets
OEt-(R*NOAt-1 )
Operating in come for the year OEt =t; reported net profit after tax of the parent company's profit after tax+ expense-Interest
income after taxes
r =rate of inflation
NOAt-1 =netoperatingassetsforyeart-1

The study sample

Is the Statistical Sample of listed companies in Tehran Stock Exchange?
The scope of research
The time period of this study, has been considered a ten year period, from 2001 until 2010
Sampling and sample size
It not the case in this study, but the study's statistical listed companies in Tehran Stock Exchanges limited based on the following criteria:

the study period (from the beginning of 2001 to end of 2010) and according to the information needed for a year prior to the year under
review is a listed company in 2000 before the end of 2010, under the condition that its name the companies listed above have not been
omitted and required information be available.

In order to increase the compatibility and the equalization of the selected firms, the financial year to the end of March each year during
the study period (2001 to 2010 does not change).

To perform the similarity and classification of items in the financial statements, the selected Company not to be manufacturing and not to
be the component of banks and financial institutions (investment companies, financial intermediation, holding and leasing companies)

5%ofthe observations are excluded.

After passing through the sample selection, sample size requirements, the company reached the114 data was collected between 2001 to 2010 for
these companies.

239

An Investigation into the Relationship between the Market Value of Intangible Assets in Tehran Stock Exchange
International Journal of Economy, Management and Social Sciences Vol(4), No (2), February, 2015.

Methods of data collection

In this research, the data collection has been collected by the usage of the library approach in the literature, the theoretical study of Persian and
Latin books and magazines are collected. Based on the definitions of the variables and how they are measured, the data needed to study some
accounting items extracted from the audited financial statements of the company. Accordingly, the data needed for research has been compiled
through data collection, documentation, examples and with reference to the companies financial statements, explanatory notes, Weekly reports,
Monthly Stock Exchange, and the library and website of Tehran Stock Exchange and also by the usage of comprehensive statistics of Tadbir
pardaz and Rahavarde-Novins software.
Methods of data analysis and hypothesis testing
In this study, several statistical methods which were used in the research are described in more detail. In this study, after the data collection,
descriptive statistics of the variables was calculated. The statistics include the mean, median, standard deviation and other information which
were used. The most important statistical tests in this study are FLymertest, Hasman Levin test, and Lin and Chutest. In this way, the
significance which is taken from this research and the hypothesis of regression models, including the independence and normality of errors,
normality and linear variables has been studied. The data were originally stored in the database and then the data were transfer red in to EXCEL
soft ware and EVIEWS 6 field data and the results of this analysis were provided.

4.

Data analysis

The reliability of variables

The reliability of the variables is presented in Table 2. To determine the reliability of the variables, Levin, Linand Chutests has been used. The
test results indicate that the independent variables, dependent and controlled variables were studied during steady level of research. Because PValue for Test was lower than 5%. Reliability means that the mean and variance of variables over time and the covariance between the variables
of year has been fixed.
Table2. Reliability of test variables
Probability statistics Levin, Lin and Chu

Base Levin, Lin and Chu

0.0000
0.0000
0.0000
0.0000
0.0000

-27.38
-18.39
-6.72
-9.42
-14.01

Type of test
Variables
The market value of the company
Identifiable intangible assets
Net operating assets excluding intangible assets
Net financial assets
Abnormal operating income

Descriptive statistics of variables in the Entire Company

Descriptive statistics for the study variables are presentedinTable3.
Table3. Descriptive statistics for variables in The Entire Company
Coefficient of
Variation
1.66
4.92
0.09
9.31
38.53

Standard
deviation
671.900
69.325
506.403
363.873
228.975

Minimum

Maximum

Middle

Average

Number

0
0
-186.167
-2.377
-5.417

7.532
1.134
5.352
3.063
1.356

173.996
2.103
105.817
-22.151
2.543

404.661
14.088
256.566
-39.079
-5.942

1150
1150
1150
1150
1150

Criteria
Variables
The market value of the company
Identifiable intangible assets
Net operating assets exclude in intangible assets
Net financial assets
Abnormal operating income

The main hypothesis in all companies

The main hypotheses: There is a significant relationship between the amount of intangible assets and the market value of listed companies in
Tehran Stock Exchange. To test the main hypothesis of the Hasman test, the fixed effects model has been used.
Fixed effects regression model of identifiable intangible assets on the market value of all companies during the period of study are presented in
Table 4. The results show that the influence of intangible assets recognized on the companies total market value is positive (25.0) and the
probability statistic (0.0046).
Other results indicate that, in all companies, the effect of operational net assets was negative but the effect of abnormal operational income on
the value market of the companies has been positive and meaningful.
The results of F-statistic show that the model is general and were meant to test the Watson camera has noun to correlation problem.
In addition, the results regarding the determined modified coefficient show that, in whole study, about 70% of changes in value market of all
companies were influenced by identifiable intangible assets and controlled variables.
Due to the significant impact on the market value of identifiable intangible assets of companies, the main research hypothesis is confirmed.
Table4. Impact on the market value of identifiable intangible assets of the companies
Likelihood statistic t

Base t

The regression coefficients

0/0000
0.0046
0.0000
0.0000
0.0000
Camera test-Watson
1.96

27.68
3.16
17.46
15.97
7.16
Likelihood statistic F
0.0000

303.804.3
0.25
0.47
0.53
0.3
Adjusted coefficient of determination
0.79

Statistics
Variables
Constant
Identifiable intangible assets
Net operating assets excluding intangible assets
Net financial assets
Abnormal operating income
The coefficient of determination
0.81

Abbas Talebbeydokhti *, Iman Ghasemizade, Kobra Dehghani, Motahare Hosseinpour

240

International Journal of Economy, Management and Social Sciences Vol(4), No (2), February, 2015.

5.

Discussion and conclusions

According to research results and Sugianis Lu(1996), Juaxim and Henry(2000), WonChoiet.al(2000), Akstain (2004), Goodwin and Ahmed
(2006), Dahmashet.al(2009) and Lydia Oliviera et al(2010), the study could find the relationship between the market value of and intangible
assets. Net positive impact on the market value of the intangible assets of the companies show that the prices of intangible assets will be higher
in creased due to the efficiency of the company's asset sin excess returns for shareholders, willingness to purchases hares in the company.

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