2005 Fiscal Year Final Research Report Summary
Empirical Research on the Disclosure System of Accounting Information Adaptable to Evaluation Model of Firm's Equity
| Project/Area Number |
15530302
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| Research Category |
Grant-in-Aid for Scientific Research (C)
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| Allocation Type | Single-year Grants |
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| Section | 一般 |
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| Research Field |
Accounting
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| Research Institution | Kobe University |
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Principal Investigator |
SAKARAI Hisakatsu Kobe University, Graduate School of Business Administration, Professor, 経営学研究科, 教授 (10127368)
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| Project Period (FY) |
2003 – 2005
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| Keywords | accounting / equity evaluation / financial reporting / intellectual property / patent right |
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| Research Abstract |
This study reports the result of empirical research presenting the fact that brand value estimates are significantly positively related to stock prices, incremental to accounting variables.
There is growing recognition that intellectual properties are important determinants of firm value and national economic vitality. Examples include brands, patents, and R&D activities. The GAAP, however, do not consistently recognize such intellectual properties as accounting assets. A major reason seems to be concern about whether their values are reliably estimable differentiating from firm value as a whole. Evaluation of firms is not a function of financial accounting but of investors.
This distinction poses an interesting research question whether estimated values of intellectual properties have incremental value relevance to stock prices, given the fact that both net income of income statement and net worth of balance sheet are associated with market values of the firms. Among many kinds of intellectual properties, this study focuses on the value of corporate brand. The estimated value is measured based on the model advocated in the report of research committee on brand valuation, established by the Ministry of Economy, Trade and Industry. The model specifies the amount of corporate brand value using the information contained in the past several years of consolidated financial statements.
Empirical results show that the coefficient on brand value estimates is significantly positive for both prices and market value regressions, incremental to those variables of net income and net worth. This finding is consistent with the brand value estimates capturing value-relevant information and being sufficiently reliable to be reflected in stock prices. It seems that not the recognition of brand value but the extension of disclosure of the estimated value and the model and data used is the moderate and realizable way to enhance the value of corporate financial reporting.
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