European Business Schools Librarian's Group

ESSEC Working Papers,
ESSEC Research Center, ESSEC Business School

No DR 03022: Value-relevance of expensed and capitalized intangibles - a French survey

Anne Cazavan-Jeny ()
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Anne Cazavan-Jeny: ESSEC Business School, Postal: Avenue Bernard Hirsch - B.P. 105, 95021 CERGY-PONTOISE CEDEX , FRANCE

Abstract: Significant difference exists between the market value and book value of firms. It could be attributed to the fact that intangible assets are not reflected in the financial statements. Our resuls indicate a statistical association between the "capitalized goodwill" and the market-to-book ratio, but do not indicate any statistical link with the "expensed intangible-intensity" nor the "capitalized intangible-intensity". These results support and contradict, for a part, the explanation on the loss of value relevance of financioal information, which could be due to the non-recognized intangibles in financial statements. However, the differing French and American accounting treatments of intangible expenditures may explain why these expenses are not taken into account by french capital markets when estimating the value of companies.

Keywords: Intangible intensity; Market-to-Book ratio; Value-relevance; Goodwill; Capital markets; Ohlson model

JEL-codes: G12; M41

45 pages, July 2003

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