Corporate Reporting of Intangible Assets

Already in the early 1990s, the importance of intangible resources and the difficulty of accounting for them were raised and has grown steadily ever since. Today, intangible assets (IA) such as employee skills, knowledge, trade secrets software, copyrights and patents, customer and supplier relationships are increasingly recognised as important corporate assets, contributing significantly to a firm's competitiveness. There is a growing consensus among practitioners and policymakers that better reflection of intangibles is required in non-financial reporting in order to improve its relevance to users. Much academic research has focused on exploring this question, and in so doing, trying to establish the value of improved IA reporting for company valuations or access to credit, which has proven difficult given concerns about causality. This report report examines the incentives and challenges faced by executives, management and boards in collecting information and managing IA assets. It also examines the use of IA reporting by analysts and investors, seeking to establish whether it is valuable in satisfying specific information gaps and improving narrative reporting more generally. Finally, the report reviews the political economy of intangibles reporting in the context of other initiatives to improve narrative reporting