THE INTANGIBLE ASSETS INVESTMENTS. CHARACTERISTICS AND THE ACCOUNTING TREATMENT

In the knowledge-based economy the fundamental determinants of the enterprise value, in the present, have an intangible nature. The intangible investments are the most important factors of the enterprise success. Wealth, growth and welfare are driven nowadays by intangible investments. The knowledge economy is characterized by huge investments in human capital and informational technology. Despite of the increased importance of intangible assets, as the source of the firm` competitive advantages, the information regarding these kind of assets, both available in the inside of the firm and, which is presented to the externals, is pour. In this paper I present the reasons for this situation.intangible, investments, assets, accountancy, value

How Human Resource and Information Systems Practices Amplify the Returns on Information Technology Investments

This study examines the important roles that human resources (HR) for information technology (IT) professionals and information systems (IS) practices for all workers in an organization play in shaping returns on firms’ IT investments. In particular, we consider how incentives, autonomy, and training for IT professionals can enable a firm to better leverage the value of its IT investments. We argue that well-trained, motivated, and empowered IT professionals can help firms make better strategic choices in allocating IT investments and implementing IT projects. We also demonstrate how this moderating relationship depends upon collaborative IS and autonomy-enhancing IS practices that affect other knowledge workers in the firm. We leverage archival data for 228 firms with 736 firm-year observations and document two key findings. We find (1) that empowering HR practices for IT professionals positively moderate the effect of IT investments on firm performance, and (2) that the alignment between empowering HR practices for IT professionals and firm-wide collaborative IS practices enhances the value that firms derive from IT investments. Our results suggest that the business value of IT investments is linked to the rewards and opportunities offered to IT professionals, who have a pivotal role in the effective deployment of IT in organizations

Stakeholder, Transparency and Capital Structure

Firms that are more highly levered are forced to raise capital more often, a process that generates information about them. Of course transparency can improve the allocation of capital. However, when the information about the firm affects the terms under which the firm transacts with its customers and employees, transparency can have an offsetting negative effect. Under relatively general conditions, good news improves these terms of trade less than bad news worsens them, implying that increased transparency can lower firm value. In addition, we show that transparency can reduce the incentives of firms and stakeholders to undertake relationship specific investments. The negative effects of transparency can lead firms to pass up positive NPV investments that require external funding and to choose more conservative capital structures that they would otherwise choose. These effects should be especially important for technology firms that require a reputation for being on the leading edge.'

Tying Strategic Alignment and IT Value to Business Success Using Business Process Analysis And Redesign (BPAR)

Information technology (IT) investments are made for the purpose of obtaining value. This paper proposes that the alignment of IT investments with organizational strategic objectives (strategic alignment) leads to the attainment of value. Value results in enhanced business performance. Business process analysis and redesign (BPAR) is offered here as a tool by which strategic alignment can be achieved. The achievement of organizational objectives adds value to the firm which enhances business performance and leads to business success. Business success may be measured by increased productivity, improved business profitability, and created value for the consumer

IT in construction: aligning IT and business strategies

The extent to which information technology (IT) infrastructures and strategies are aligned with business processes and strategies varies widely along firms. The objective of this paper is to explain the success or failure of IT in construction firms by focusing on the alignment (or lack of it) between business strategy, IT strategy, organizational infrastructure, and IT infrastructure. It is hypothesized that the ‘fit’ among these elements, the domains of the Strategic Alignment Model, is positively related to the Business Value of IT in Construction. The IT Business Value is evaluated in terms of efficiency, effectiveness and business performance. By applying the Strategic Alignment Model to the Dutch construction industry, it is shown that the inadequate alignment between these domains is a major reason for the modest added business value from IT investments in this industry. The first lack of alignment is the technology shortfall: hence IT contributes in an inadequate way to strategic processes of construction firms. The second lack of alignment is the strategy-shortfall: hence the firm strategy impedes the implementation of IT that could generate a high business value

A Comprehensive Model of Information Technology Value Creation in the Supply Chain

Investments in Information Technology (I.T.) continue to grow, yet there continue to be doubts regarding the economic benefits of I.T. This paper researches prior work into what constitutes I.T. value and how I.T. creates value. Two general approaches predominate the literature on researching I.T. value - the micro economic production theory approach and the firm level process oriented approach. The micro economic production approach investigates the impact of multiple inputs (such as I.T. investment) on some output measure (such as productivity) using economic production theory techniques. This approach implicitly assumes usage of the I.T. investments. Because this approach fails to consider the usage of I.T. within the business, it lacks explanatory power in identifying how I.T. impacts firm level results. The firm level process oriented approach provides an explanation of how and why I.T. value is created because it considers I.T. usage in the business. This paper focuses on the process oriented approach and reviews prior work in this area. A comprehensive model of I.T. value building on prior work is presented

Impact Of Information Technology On The Accuracy Of Analyst Forecasts

We investigate the effect of information technology on analyst’s forecast accuracy. Our analysis suggests that analyst forecast accuracy has increased with the growth in information technology. We capture the growth in information technology with seven proxy variables; the total sales of information technology related firms, number of computers sold, number of websites, number of hosts, number of registered domains, number of bytes, and packets of information transferred.   The results are consistent with our hypothesis that the increase in information technology has decreased the errors in analyst forecasts.  Thus, our paper provides evidence of a positive impact of information technology on the overall information environment.  These findings are important for investors who use analyst forecasts to value the firm and make investments decisions, and for overall efficiency of capital markets.

Enterprise Resource Planning Systems and Firm Value: An Event Study Analysis

There is considerable debate on the contributions of IT investments to firm value. Over a decade of research on the business value of information technology has produced mixed findings. This study focuses on the business value generated by a specific kind of IT systems, namely enterprise resource planning (ERP) systems. Studying the value created by ERP systems is appropriate and important for four reasons. First, ERP systems are being widely used by corporate community. Given the widespread adoption of ERP applications, it becomes essential to assess the contributions of these systems. Second, ERP systems typically encompass a wide spectrum of organizational functions. Given the wide functional coverage of ERP systems, they are likely to have a larger impact on firm performance than those information systems focusing on a specific function. Third, ERP systems require considerable investments in hardware, software, networking, and complementary organizational changes. Since ERP investments represent a critical IT expense for firms, it becomes important to assess the returns from ERP spending. Fourth, the reported failures of ERP systems by companies such as FoxMeyer Drugs, Applied Materials, Hershey, Mobil Europe, and Dow Chemicals have questioned the very viability of ERP systems. This is another compelling reason to ascertain the true contributions of ERP systems

The Influence of Industry Growth and Firm Market Share on Firm-Level IT Value

Market-dominant firms traditionally have an advantage in growing markets because they operate with larger average plant sizes and are better able to reap the rewards of economies of scale. We present evidence that with information technology (IT), the effect is precisely the opposite: firms with less market power enjoy the benefits in a growing market. The influence of firm-level attributes on the economic value of information technology (IT) to firms has been the predominant focus of much prior research in this field. While some studies have examined how IT value differs across industries, there has been little research on how industry and firm attributes jointly affect firms’ returns on their IT investments. To that end, we develop cross-level hypotheses to examine how the latter is influenced by industry growth and firm size. By using a hierarchical linear model to test the industry-to-firm interactions, we are able to control for violations of statistical assumptions that are likely to bias cross-level estimates obtained using conventional statistical methods. Results of the analysis reveal that 93.25% of the variance in firm-level IT value lies within firms, while 6.75% is attributable to industrylevel factors. The implications of these findings for research and practice are examined

Market valuation of firm investments in training and human capital management

The relationship between a firm’s human capital management and its performance is a topic of growing interest in recent years. With the increasing role of technology and the rapid innovations in many industries, having highly skilled and knowledgeable employees is often necessary for success. Firms make these investments in training and education, along with implementing various policies regarding employee involvement, improvement, satisfaction, and retention with the expectation that they will result in positive economic performance. This dissertation examines the economic value to firms of investing in the training of their employees. The primary research questions are: (1) whether firms benefit, financially, from investments in training and human capital, and (2) if firms do benefit, what are the firm-level factors that affect how much they benefit? This dissertation contributes to the growing management literature on human capital by providing empirical tests that firm investments in human capital have a positive impact on economic performance, and by identifying firm-level factors that are complementary to these human capital investments. To conduct these empirical tests, I first use event study methodology to obtain a measure of the economic impact of information regarding a firm’s human capital management investments and policies. Subsequent regression analyses are then used to test hypotheses regarding possible complementary relationships between firm-level factors and its human capital investments. Results of the event study provide robust support that training matters; significant abnormal returns are found at appropriate event windows for investments in human capital. Subsequent analysis of the abnormal returns offers some but not unqualified support for the complementarity of investments in advertising, physical capital, and R&D as explaining the return to human capital