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CORPORATE VALUE CREATION ON INTANGIBLE ASSETS AND
VOLUNTARY DISCLOSURE IN NIGERIA.
TABLE
OF CONTENTS
CHAPTER
ONE: INTRODUCTION
1.1 content
of the problem
1.2 statement
of problem
1.3 the
purpose of the study
1.4 research
question
1.5 hypothesis
1.6 the
significance of the study
1.7 limitation
of the study
1.8 definition
of terms
1.9 organization
of the study
CHAPTER
TWO: REVIEW OF RELEVANT LITERATURE
2.0 Introduction
2.1 an
overview of intangible assets
2.2 classification
of intangible assets
2.3 standards
on recognition and accounting for intangible assets
2.3.1 international accounting standard (IAS 38)
provision
2.3.2 measurement and value impact of intangible
asset
2.4.1 for acquired intangible assets
2.4.2 for internally generated intangible assets
2.4.3 past expenses not to be recognized as an
asset
2.4.4. measurement models
2.4.5 useful life of intangible assets
2.4.6 intangible assets with finite useful lives
2.4.7 intangible assets with definite useful lives
2.5 value
impact of intangible assets on corporate performance
2.5.1 research and
development
2.5.2 advertising
2.5.3 brands and trademarks
2.5.4 human resources (i.e. intellectual property)
2.6 disclosure
of intangible assets in annual reports
2.6.1 relevance of voluntary disclosure
2.6.2 conclusion
CHAPTER
THREE: METHODOLOGY
3.0 Introduction
3.1 research
design
3.2 sampling
procedure/sample size determination
3.3 data
collection method
3.4 test of
validity and reliability
3.5 operational
measures of the variables
3.6 data
analysis techniques
Questionnaire
CHAPTER ONE
INTRODUCTION
1.1 CONTEXT OF THE PROBLEM
In
recent years, intangible assets have been identified as major levers of value
creation in many industries. Consequently, investor are strongly interested in
obtaining information about the intangible assets stock of companies
(Marasca, 2003). According to Titular
(2008), during the last two decades we have progressively moved into a
knowledge based, fast changing and technology intensive economy in which
investments in human resources, information technology, research and
development and advertising have become essential in order to maintain the
firms competitive position and ensure its future viability. Goldfinger (1997)
submits that the source of economic value and wealth is no longer the
production of material goods but the creation and manipulation of intangible
assets. In this scenario, corporate entities feel a growing need to make
investments in intangible resources on which the future success of the company
is based.
Leandro
(2000) defines intangibles assets in accordance with the provision IAS 38
(IASC, 1998b)as non-monetary production or supply of goods or services, for
rental to other, or for administrative purposes: (a) that are identifiable (b)
that are controllable by an enterprises as a result of events, and (c) from
which future economic benefits are expected to flow to the enterprise.
Considering the vast and complex nature of these corporate resources,
Mortensen, Eustace and Lannoo (2009) propose a five category classification of
intangible in financial perspective such include: innovation capital (ie
R&D), structural capital (i.e. intellectual capital and knowledge assets,
organizational coherently and flexibility, workforce skill and loyalty).
Executor contracts (i.e. operating liencenses and franchises media and other
broadcast lences etc), Market capital (i.e. brands trademarks and mask heads)
and goodwill.
Looking
at the vast scope of intangibles and its characteristic value creative impact
on the business organization, in particular and the economy at large; most
advanced and emerging economics have channeled focus on how to recognize and
measure the inherent value.
In
response to this yearning, some international and national standard setting
bodies have prescribed standards and rules for recognizing and reporting the
value of intangible assets in corporate performance. Such include the
provisions of international accounting standard (IAS38), GAAP in U.S, GASB in Germany,
ASB in UK, ASSB in Australia, NASB in Nigeria etc. consequent on this, the
periodic disclosure of recognized impact of intangible assets in the value
creation extend of the corporate entity attracts the interest of financial
information users especially the investors.
The
Nigerian scenario may not be uncommon with the global perception on the
inherent economic benefits of intangible assets in corporate performance.
However, the need to ascertain the prevailing situation in Nigeria corporate
reporting framework and practice in relation to the matter will form the
background on which the study will spring.
1.2 STATEMENT OF PROBLEM
Several
corporate entities feel a growing need to undertake important investments in
their human resources, new technology, research and development,
knowledge-based assets and other intangible on which the future success of the
company is based, but in most cases these investment are not reflected to
balance sheet due to the existence of very restrictive accounting criteria for
recognition and valuation of these asserts.
As
a consequence, annual reports are becoming less informative on the firms
current financial position and future prospect because they provide acceptable
estimates of performance but not reliable position of the value of the company.
This situation sends negative impression on existing and prospective
stakeholders of the firms. However, volumes of literature reveal prescribed
standards on and disclosure of intangible assets by standard setting bodies of
international and national reporting jurisdiction.
1.3 THE PURPOSE OF THE STUDY
The
study will aim at the following:
1. To
identify the relevant intangible assets in corporate perspective.
2. To
examine the standards for recognition and valuation of intangible assets in
Nigeria.
3. To
assess the value creation, impact of these assets if any.
4. To
ascertain the regulatory framework on disclosure of intangible assets value in
annual reports.
5. To
consider the extend of disclosure among relevant corporate entities.
1.4 RESEARCH QUESTION
The
following research questions will guide the direction of enquiry.
1. To what extend are intangible assets
recognize and valued?
2. To
what extend does research and development foster the corporate value of firms?
3. To
what extend does goodwill cause increase in corporate value?
4. To
what extend do other intangible assets influence corporate performance?
5. To
what extend does voluntary disclosure impact on investment?
1.5 HYPOTHESIS
The
study will test the following hypothesis:
H01:
there is no significant relationship between intangible assets existence and
corporate value created.
H02:
The level of corporate performance does not depend on the level of intangible
assets recognized.
H03:
There is no significant relationship between disclosure of intangible assets
and reporting standard in Nigeria.
H04:
The level of voluntary disclosure of intangible assets does not impact on the
level of investment.
1.6 THE SIGNIFICANCE OF THE STUDY
The
findings of the study will contribute immensely to existing stock of knowledge.
It will serve as a source of reference to further studies and provide
opportunities for more inquiry. To practitioners in the corporate
organizations, it will reveal the hidden treasures of knowledge about intangible
assets in relation to corporate value creation. Besides, the investors and
government will be enlightened on the value driver in corporate reporting
setback for critical attention.
1.7 LIMITATION OF THE STUDY
Considering
the purpose of the study, the following setbacks will be expected.
1. The
frame of time to accomplish the study will be inadequate; as such detailed
inquiry shall be overlooked.
2. Access
to adequate relevant material will also pose some limitation. This is dependent
on the fact that the study focuses on disclosure of true corporate valued which
some management personnel may perceive different.
3. The
disposition of respondent to provide relevant answers to research questions
will also limit the study.
4. All
successful research work involved financial implication. The lack of adequate
financial resources at our disposal will also mitigate the extend of inquiry.
1.8 DEFINITION OF TERMS
For
the purpose of clarity and in the context of this study, the following will be
defined as:
1. Intellectual Capital: Financial capita
for knowledge based intangible assets.
2. Financial Capital: Financial resources
channel to an aspects of intangible assets; such as brands, trade mark, patent,
mastheads etc.
3. Innovation Capital: Financial resources
budgeted for or expended in research and development.
4. GASB: Mean German Accounting Standard
Board
5. ASB: Accountings standard board in
united kingdom
6. ASSB: Accounting Standard setting board
1.9 ORGANIZATION OF THE STUDY
The
study will be organized into five chapters. In chapter one will be the
introduction of the subject matter. It will consider the context of the
problem, statement of the problem, purpose of the study, research question,
hypothesis, and significance of the study, definition of terms, limitation of
the study and organization of the study.
The
second chapter will focus on review of relevant literature. The chapter three
will address the methodology of the study. In it will be considered, research
design, sampling procedure and size, data collection method, operational
measures of variable and data analysis technique.
Chapter
four consider presentation and analysis of data collected while chapter five
will discuss the findings, make collection and necessary recommendation.
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