Accounting recognition of intangible assets: Theory and evidence on economic determinants

Wyatt, Anne 2005, Accounting recognition of intangible assets: Theory and evidence on economic determinants, Accounting Review, vol. 80, no. 3, pp. 967-1003, doi: 10.2308/accr.2005.80.3.967.

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Title Accounting recognition of intangible assets: Theory and evidence on economic determinants
Author(s) Wyatt, AnneORCID iD for Wyatt, Anne
Journal name Accounting Review
Volume number 80
Issue number 3
Start page 967
End page 1003
Total pages 37
Publisher American Accounting Association
Publication date 2005-01-01
ISSN 0001-4826
Summary This paper examines the extent to which management makes accounting choices to record intangible assets based on their insights into the underlying economics of their firm. It exploits a setting in which management has accounting discretion to record a wide range of intangible assets. The results suggest that management's choice to record intangible assets is associated with the strength of the technology affecting the firms operations, the length of the technology cycle time, and propertyrights-related factors that affect the firm's ability to appropriate the investment benefits. These effects are more important than other contracting and signaling factors consistent with the underlying economics operating as a first-order effect as envisaged by GAAP. The results also indicate that the intangible assets management has a voluntary (unregulated) choice to record—identifiable intangible assets—are more highly correlated with underlying economic factors than the regulated classes, purchased goodwill and R&D assets. This result suggests that limiting managements' choices to record intangible assets tends to reduce, rather than improve, the quality of the balance sheet and investors' information set.
Language eng
DOI 10.2308/accr.2005.80.3.967
Indigenous content off
Field of Research 1501 Accounting, Auditing and Accountability
HERDC Research category C1.1 Refereed article in a scholarly journal
ERA Research output type C Journal article
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Document type: Journal Article
Collections: Faculty of Business and Law
Department of Accounting
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