Intangible assets and capital structure

Lim, Steve C.; Macias, Antonio J.; Moeller, Thomas

doi:10.1016/j.jbankfin.2020.105873

Cited by 67 publications

(82 citation statements)

References 47 publications

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“…As enterprise profitability is associated with the productivity of specific outlays (e.g., assets), and it determines the scale of investments, the values of long-term investments in absolute terms used in these calculations were calibrated by using the book value of total assets. This approach treats the LTI as a standard measure of the assets and capital structure (Lim et al, 2020). It is justified by excluding the possible impact of the scale of activities on longterm investment policy by companies.…”

Section: Methodsmentioning

confidence: 99%

The European Union’s Environmental Policy and Long-Term Investments of Enterprises

Janicka¹,

Sajnóg²

2021

ERSJ

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Purpose: Current European Union efforts are focused on creating regulations that are conducive to long-term investor commitment, i.e. they are fighting short-termism on financial markets. Enterprises that implement the European Union's environmental policy are seen to engage long-term financial resources, which should therefore dominate the structure of their assets. The primary goal of the paper is to ascertain whether a company's high environmental performance (E-index) is positively correlated with the value of its long-term investments. Design/Methodology/Approach: The empirical research is carried out in two parts. The first part presents the correlation between the company's E-index and the share of its long-term investments in total assets. For comparison, we examine these relationships with ESG, as well as the S and G scores. In the second part, we assess the character and strength of the impact of the company's E-index on the value of its long-term investments. This study includes companies listed on 14 Western European stock exchanges, covering the period 2002 to 2019. Findings: Contrary to our assumptions, we find, first, that the environmental index is negatively related to the share of long-term investments in assets in most countries. Second, using panel dataset for the analysed European Union markets, we find evidence that the environmental index negatively affects the value of long-term investments, indicating that the current actions undertaken by the European Union have no empirical justification. Practical Implications: The results of the research may be useful for researchers, practitioners, and regulators from the European Union and the European Union countries in understanding the relationship between a company's E-index and its investments. Originality/Value: There is no research which proves that the increase in long-term investments, and thus the increase in the availability of long-term capital, is of key importance for enterprises, so our research is pioneering and unique.

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Section: Methodsmentioning

confidence: 99%

The European Union’s Environmental Policy and Long-Term Investments of Enterprises

Janicka¹,

Sajnóg²

2021

ERSJ

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“…These activities, perceived as innovation, lead a firm to higher performance (Teece, 1998;Acedo-Ramírez & Ruiz-Cabestre, 2014). Internally-generated intangible assets include items of substantial value for a firm, such as brand reputation, product development, and customer relationship, largely absent from financial statements as they are difficult to quantify (Lim et al, 2020). The study of Lim et al (2020) highlights that intangible assets play an increasingly determinant role in the current economy, making traditional accounting-based measurement more and more distant from reality.…”

Section: Sales Grow Ratementioning

confidence: 99%

“…Internally-generated intangible assets include items of substantial value for a firm, such as brand reputation, product development, and customer relationship, largely absent from financial statements as they are difficult to quantify (Lim et al, 2020). The study of Lim et al (2020) highlights that intangible assets play an increasingly determinant role in the current economy, making traditional accounting-based measurement more and more distant from reality. Ngo and Vu (2020) provide empirical evidence of the impacts of customer agility on the performance of firms in the tourism sector.…”

Section: Sales Grow Ratementioning

confidence: 99%

Firm-Specific Factors Influencing the Performance of Young Small and Micro-Sized Firms Located in Algarve

Solyukova

Viegas

Pinto

2023

Tourism (Zagreb, Online)

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The main objective of this paper is to study how firm-specific factors affect the financial performance of tourism-related young small and micro-sized firms located in Algarve, Portugal, that started their activity during the last years of the debt crisis of Europe. The sample included 106 Portuguese small and micro-sized firms in the hospitality sector, established between 2012-2014, which remain active in 2019 and financial data from 2015 to 2018 was analysed. Descriptive statistics, group statistics, correlations, and regression model analyses were applied. The dependent variable representing profitability was the return on assets ratio (ROA). The independent variables were short-term, long-term and total debts, slack resources, sales growth, tangibility and size of the firm. A negative relationship between performance and long-term and short-term debts was found, confirming the theory that the most profitable firms tend to borrow less as they do not need external capital. Also, a negative relationship between ROA and tangibility was found, which means that as the level of tangible assets lessens, more intangible assets there are. These results give some hints to help tourism-related small and micro-sized firms located in Algarve take innovation, flexibility, and digitalisation strategies, particularly important during a pandemic crisis.

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“…When a firm has a high proportion of intangible investments, the amount of debt needs to be limited to manage its risks (Harris and Raviv, 1991;de Jong et al, 2008;Frank and Goyal, 2009;Fan et al, 2012). The alternative view of prior studies suggests that intangible assets offer substantial backing for leverage as it comprisesan increasing proportion of the firm's value (Lim et al, 2020). Some of the intangible assets that are liquid and redeployable are accepted as collateral by lenders as they are associated with innovating ways of leveraging and financing these assets (Loumioti, 2012).…”

Section: Institutional Governancementioning

confidence: 99%

Intellectual capital and institutional governance as capital structure determinants in the tourism sector

Dalwai

Sewpersadh

2021

JIC

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PurposeThis study investigates the capital structure determinants of the Middle East tourism sector by examining intellectual capital (IC) efficiency and institutional governance along with firm-specific and macroeconomic variables. This research also identifies the determinants of capital structure for tourism companies in the Gulf Cooperation Council (GCC) and non-GCC countries.Design/methodology/approachData were collected from 45 listed tourism companies of nine Middle Eastern countries over five years from 2014 to 2018. The data were analysed using ordinary least squares (OLS) regression and checked for robustness using the generalised methods of moment (GMM) estimation.FindingsOverall, the results indicate that tourism companies rely more on short-term debt (STD) than long-term debt (LTD), thus decreasing liquidity and increasing financial risk. Furthermore, tourism companies in non-GCC countries have higher IC efficiency compared to those in GCC countries. The aggregate institutional index is much higher for GCC countries compared to non-GCC countries. The OLS estimations suggest IC efficiency and institutional governance index provide inconclusive evidence as a determinant of capital structure proxy. High capital employed efficiency (CEE) is associated with more leverage for tourism firms. Theoretically, the results support pecking order and trade-off theories due to the relationships between firm-specific indicators and debt.Originality/valueThis study closes the gap in the capital structure debate by providing valuable insights into IC efficiency and institutional governance. These two factors serve as capital structure determinants in the Middle East and the GCC and non-GCC regions.

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Intangible assets and capital structure

Cited by 67 publications

References 47 publications

The European Union’s Environmental Policy and Long-Term Investments of Enterprises

The European Union’s Environmental Policy and Long-Term Investments of Enterprises

Firm-Specific Factors Influencing the Performance of Young Small and Micro-Sized Firms Located in Algarve

Intellectual capital and institutional governance as capital structure determinants in the tourism sector

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