Presentation Details

The Fourth International Conference on Knowledge, Culture and Change in Organisations

The Importance of Intangible Assets in Initial Public Offerings

Prof Robert Brooks, William Dimovski.


This paper follows Beatty and Ritter (1986), who argue that lower uncertainty about the value of an initial public offering (IPO) reduces the "need" for the underpricing of an IPO. Australian IPOs often identify the existence of intangible assets such as goodwill, licenses, brand names, trademarks, patents and capitalized research and development costs in the prospectus. This paper analyses if IPOs identifying the existence of such intangible assets in the prospectus might reduce uncertainty about their valuation and hence allow a lower underpricing return. While the reporting of intangible assets such as goodwill and license costs in the prospectus are not significant ingredients in the level of underpricing, the identification and valuation of intangible assets such as brand names, trademarks, patents and capitalized research and development costs is significant in reducing the level of underpricing return. Our findings are also consistent with previous studies concluding that both the size of the new issue and the use of an underwriter are important in the level of underpricing return.

Presenters

Prof Robert Brooks  (Australia)
Associate Dean
RMIT Business
RMIT University

Robert Brooks is Professor of Financial Econometrics and Associate Dean (Research), RMIT Business. His research interests are in financial econometrics and he has numerous publications in a wide range of journals.


William Dimovski  (Australia)
Lecturer
School of Accounting and Finance
Deakin University

Bill has a doctorate from RMIT. He has taught finance at Deakin University's MBA program for 15 years. He is married with one child and lives in Geelong, Australia.

Keywords
  • IPOs
  • Intangibles
  • ASX



(30 min. Conference Paper, English)