Counterarguments to reform accounting for intangibles Voorbeeldclausules

Counterarguments to reform accounting for intangibles. Xxxxxxx (2007) critically reviewed policy recommendations. First of all, Xxxxxxx (2007) argued that although many economists say that financial statements are losing relevance, there is no clear evidence of this. During the late 1990s a lot of papers discussed the value relevance of financial statements. The results of these researches were mixed. For instance: the last couple of years, more traditional industries such as oil, mining, commodities and steel have been booming due to the increase of demand for industrial output. Secondly, even though accounting models fail to recognize many intangibles, this could be a good thing. Xxxxxxx supports this statement by the following. Some claim that technological companies systematically undervalue their companies by not including intangible assets, and as a result have it difficult to raise capital. According to Xxxxxxx (2007) this does not make sense, since the balance sheet is not designed to form the basis for valuation. Valuation should be done based on the income statement. Many technology companies such as Google are valued relatively high by investors and seem to have little trouble in raising capital. Thirdly, because accounting models fail to recognize many intangibles, firms fail to obtain financing. Again Xxxxxxx (2007) disagrees because there is little evidence to support this claim. Furthermore he states that financial markets quickly adept to find new ways of financing different types of assets, including intangibles and even when traditional ways of financing are not available. It is hard to believe that companies have difficulties in raising financing for intangible assets, when these assets eventually generate cash flows. Xxxxxxx (2007) concludes with some remarks that during the last fifteen years a lot of research has been done to develop standards to disclose information on intangible assets. However, little actual progress has been made. As a matter of fact, is it actually necessary to develop new standards? Because of large differences in types of intellectual capital between organizations, it will be very difficult to create one comprehensive framework. The nature and the measurement of intangibles vary considerably across industries. In addition, the absence of guidelines to disclose intangible assets did not prevented companies to raise enough capital. In fact, Xxxxxxx (2007) argues that financial markets worked well to finance intangible investments.