Proceedings of the 3rd European Conference on Intellectual Capital

S&P 500 Market Cap ($ billions)
14,000
12,000
10,000
8,000
6,000
4,000
2,000
-
Tatiana Garanina and Yana Pavlova
Components <strong>of</strong> S&P 500® Market Capitalization
Market Premium
Intangible Book Value
Tangible Book Value
1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005
Figure 1: Market capitalization <strong>of</strong> companies from <strong>the</strong> S&P 500 [source: Ned Davis Research, Inc.]
Planning to achieve a certain goal, management must assess company’s current state, determine <strong>the</strong>
gap between it and <strong>the</strong> desired future state, and finally form a sequence <strong>of</strong> actions needed to address
this gap what again proves <strong>the</strong> actuality <strong>of</strong> this paper. A company can develop not only investment
strategies, but strategies <strong>of</strong> increasing production, strategic M&A with <strong>the</strong> knowledge about intangible
assets.
In this article <strong>the</strong> main aim <strong>of</strong> <strong>the</strong> research is to define <strong>the</strong> impact <strong>of</strong> fundamental value <strong>of</strong> both
tangible and intangible assets on <strong>the</strong> market value <strong>of</strong> assets on two markets – developed (case <strong>of</strong>
companies from <strong>the</strong> UK market) and emerging (case <strong>of</strong> companies from <strong>the</strong> Russian market).The
conclusions will be made both on <strong>the</strong> whole sample <strong>of</strong> <strong>the</strong> companies under consideration, as well as
from <strong>the</strong> point <strong>of</strong> <strong>the</strong>ir belonging to a certain field. But before presenting <strong>the</strong> results <strong>of</strong> <strong>the</strong> research
carried out by <strong>the</strong> authors, <strong>the</strong> following questions will be raised and discussed: 1)<strong>the</strong> problem <strong>of</strong>
defining Intangible Assets and connection <strong>of</strong> this concept with such categories as “Intellectual capital”,
“Intangibles”, “Knowledge assets”, etc, 2) <strong>the</strong> question <strong>of</strong> Intangible assets evaluation models. Upon
consideration <strong>of</strong> <strong>the</strong> above mentioned problems, <strong>the</strong> authors formulate <strong>the</strong>ir personal position.
The structure <strong>of</strong> <strong>the</strong> paper is <strong>the</strong> following. First <strong>the</strong> main approached to definition <strong>of</strong> <strong>the</strong> main
concepts are introduced, <strong>the</strong>n <strong>the</strong> method which is chosen for evaluation Intangible Assets in <strong>the</strong>
paper is represented (method <strong>of</strong> Calculated Intangible Value), <strong>the</strong> research model <strong>the</strong> main
hypo<strong>the</strong>sis are formulated with providing statistical information about <strong>the</strong> sample. At <strong>the</strong> end <strong>of</strong> <strong>the</strong>
paper <strong>the</strong> main results and directions for fur<strong>the</strong>r research are highlighted.
2. The approaches to intangible assets and intellectual capital definition
There exist various approaches to defining <strong>the</strong> Intangibles, Intangible Assets and Intellectual Capital.
Some authors consider <strong>the</strong>se terms to be synonyms, while <strong>the</strong> o<strong>the</strong>rs still separate <strong>the</strong>m from each
o<strong>the</strong>r. Apart from that, a number <strong>of</strong> authors do not <strong>of</strong>fer any definition, but only separate <strong>the</strong> basic
components, being a part <strong>of</strong> <strong>the</strong> concepts referred above. Without claiming <strong>the</strong> completeness, lets us
examine <strong>the</strong> basic approaches to defining Intangible Assets and Intellectual Capital. At that, we shall
firstly give <strong>the</strong> approaches to <strong>the</strong> definitions <strong>of</strong> <strong>the</strong> concepts, and afterwards consider <strong>the</strong> composition
and structure <strong>of</strong> Intangible Assets (Intellectual Capital).
According to <strong>the</strong> opinion <strong>of</strong> B. Lev, to which <strong>the</strong> authors <strong>of</strong> this paper subscribe, <strong>the</strong> terms Intangible
Assets, Knowledge Assets and Intellectual Capital are interchangeable owing to <strong>the</strong> fact that all three
terms are “widely used: Intangible Assets in accounting literature, Knowledge Assets – by
economists, Intellectual Capital – in management and law literature; and on <strong>the</strong> whole <strong>the</strong>y come to
<strong>the</strong> same: to <strong>the</strong> future benefits that are not embodied materially” [Lev, 2003].
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