Impact of Intangible Assets on Profitability of Hong Kong Listed Information Technology Companies

Li, Hanran; Wang, Wenshu

doi:10.5296/ber.v4i2.6009

Cited by 21 publications

(31 citation statements)

References 41 publications

(18 reference statements)

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“…It is an alternative way to use all such expenses instead of only using intangible assets value from the balance sheet. Li and Wang (2014) for instance used three types of expenditures to represent intangible assets, namely R&D cost, employee benefit expense and sales training cost. As the measure of performance (profitability), they used ROA.…”

Section: Prior Related Literaturementioning

confidence: 99%

The Impact of Intangible Factors on Profitability: Evidence From Corporations Traded at Muscat Securities Market in Oman

Kaymaz

Yilmaz

Kaymaz³

2019

CJFA

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The objective of this paper is to determine whether corporate financial performance may be influenced from intangible assets owned by a company and some special incurring expenditures benefiting the intangible value of the company even though such items could also be technically expensed contrary to getting capitalized. Combining the intangibles reported on the corporate balance sheets with the expenditures such as R&D, staff and advertising expenses, a variable called Calculated Value of Intangible Factors (CVIF) is specifically generated and is examined as to whether intangibles alone might potentially have a significant effect on corporate profitability ratios, and if so to what extent. The sample consists of non-financial public companies traded at Muscat Securities Market in Oman and the sampling period covers the time window from 2013 until 2017. Two regressors are used to capture the effect of intangible factors; meaning CVIF and CVIF/Total Assets (CVIFTA) respectively, the latter of which is a relative measure. Four (4) profitability measures, namely Gross Profit Margin (GPM), EBIT Margin (EBITM), Net Profit Margin (NPM) and Return on Assets (ROA) are developed as proxies to indicate for corporate financial performance. Considering all the resulting eight (8) models each, panel data regression analyses are performed separately to specifically document the linkage between corporate intangibles and corporate financial performance. Results provide a strong evidence by showing that intangibles do have a significant and a positive effect on corporate financial performance, except when ROA is regressed by CVIFTA rather than CVIF. This effect on and the linkage with financial performance is documented to be the most robust once GPM and NPM are to indicate the performance in the forms of CVIF and CVIFTA respectively.

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Section: Prior Related Literaturementioning

confidence: 99%

The Impact of Intangible Factors on Profitability: Evidence From Corporations Traded at Muscat Securities Market in Oman

Kaymaz

Yilmaz

Kaymaz³

2019

CJFA

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“…Examining the Tourism companies listed in the Amman Exchange Al-Shamaileh and Khanfar (2014) find the statistically significant impact for the financial leverage on the profitability. Li and Wang (2014) examine the association between intangible assets and financial performance of the listed Information Technology firms in Hong Kong exchange market and find that both R&D expenditure and sales training affects ROA positively.…”

Section: Business and Economic Researchmentioning

confidence: 99%

Determinants of Dividend Payout Ratio: Evidence from Indian Companies

Labhane¹,

Das

2015

BER

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<p class="ber"><span lang="EN-GB">The present study analyzes the trend and determinants of dividend payout ratio of National Stock Exchange (NSE) listed companies in India. The study is based on 239 companies, which have continuous data during the period 1994-95 to 2012-13. From the trend analysis we find that the number of dividend paying companies has declined but the average dividend paid by them has increased manifold over the last two decades which suggests that the dividend paying companies have paid higher amounts of dividends in the later years. The dividend payout ratio varies across all the industries with the electricity industry having the lowest payout ratio and the miscellaneous manufacturing industry having the highest payout ratio. The empirical results suggest that firms with high free cash flow, firms which are larger, more profitable and mature, pay more dividends while riskier, more leveraged and firms with high investment opportunities tend to pay lower dividends. The dividend distribution tax rate imposed by government affects the dividend payout ratio positively. The market-to-book ratio, debt-to-equity ratio, free cash flow, business risk, age, size, profitability and dividend distribution tax variables are significant for the entire period of study. Whereas, the business risk, profitability and dividend distribution tax variables are significant for the entire period of study i.e. 1995-2013 as well as for the two sub-periods 1995-2003 and 2004-2013. Overall, the results are consistent with the pecking order, transaction cost, signaling and firm life cycle theory of dividend policy and we find a little evidence for agency costs theory.</span></p>

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“…al. 2008) and corporate performance, because it takes time for them to reveal their contribution (Li & Wang 2014; whoafter arguing that in literature the influence of these investments on performance remains controversial -suggest lagged R&D expenditure as an instrumental variable to examine the long term effect on performance).…”

Section: Discussionmentioning

confidence: 99%

“…Drawing upon the knowledge-based view of the firm, they reveal that more knowledge assets have a positive impact on the foreign sales intensity, yet only up to a point. Li and Wang (2014) investigated the relationship between intangible assets and financial performance of the listed technology firms in Hong Kong exchange market for a five year period, focusing on research and development cost, employee benefit expense, and sales training (they revealed that R&D investments and sales training are beneficial to firms' financial performance measured by ROA while employee benefit not).…”

Section: Theoretical Backgroundmentioning

confidence: 99%

In the Midst of Crisis: Knowledge Assets and Operating Efficiency of Italian Listed Companies

Taliento¹

2017

IJBM

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Firms' knowledge assets represent vital resources that contribute, in general, to corporate performance and value creation. At an earlier stage, they are expected to help enhance the operational efficiency of firms they belong to. In this light, under a Resource-Based Theory framework, we intend to find whether and to what extent this expectancy is verified also during the recent crisis in Italy. In more detail, we considered 612 firm-year observations relating to the Italian listed companies during three consecutive years -2010, 2011 and 2012 (when the financial crisis reached its peak in Italy) -analysing overall about 7.000 data/numbers under a Fixed Effects Panel Data Model. The findings are robust: we document a significant positive correlation between Operational Efficiency and Patent assets & Intellectual Property Rights, Goodwill, Trademarks & Licenses, while we do not find a correlation with reference to Research & Development Capital (and Advertising investments), also controlling for employees, leverage and time/sector dummies. In the midst of a very turbulent period, most intellectual assets (the former) appear from the efficiency point of view more valuable and reliable than others (the latter) in hampering the profitability drop. Hence, unlike the tangible and financial assets, such resources are prospected to be strategic levers that make it possible to maintain efficiency or to enable a faster recovery in terms of wasted efficiency. That is, in turbulent times, technology, marketing-related and contractual-legal assets appear significantly associated with operational efficiency and therefore beneficial to corporate results.

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Impact of Intangible Assets on Profitability of Hong Kong Listed Information Technology Companies

Cited by 21 publications

References 41 publications

The Impact of Intangible Factors on Profitability: Evidence From Corporations Traded at Muscat Securities Market in Oman

The Impact of Intangible Factors on Profitability: Evidence From Corporations Traded at Muscat Securities Market in Oman

Determinants of Dividend Payout Ratio: Evidence from Indian Companies

In the Midst of Crisis: Knowledge Assets and Operating Efficiency of Italian Listed Companies

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