Abstract
The economic environment has changed from the era of agriculture, industrial and now to an information era. In this information era, intangible assets dominate the environment compared to during industrial era that was mainly dominated by tangible assets. Intangible asset plays an important role in today’s economy with the shift from being an industrialised economy to a high-tech and service-oriented. In Malaysian capital market, there is an upward trend of intangible assets development. Hence, the question of whether the value relevance of intangible assets is properly reflected in financial statements arises. The objective of this study is to examine the value relevance of intangible assets in Malaysia before and after the adoption of FRS 138. This study used a sample of 113 public listed companies from four main sectors namely Industrial Product, Trading services, Consumer Product and Technology. The period under study was divided into two, that is, pre adoption period (2002-2005) and post adoption period (2008-2011) to observe if there were any improvements on the value relevance of intangible assets after the adoption of International Financial Reporting Standards (IFRS). The data was analysed to examine the value relevance of intangible assets in Malaysia before and after the adoption of FRS 138. The finding of this study suggests that intangible assets are value relevant in the pre adoption period but are not value relevant in the post adoption period. This study may contribute to the existing literature on the economic consequences of adopting IFRS and also preliminary indication of the impact of FRS 138 adoption.
Highlights
As the economic environment changes to become more global, the way and nature of the investments being made domestically and internationally change over the time
Malaysian Accounting Standard Board (MASB) defines Malaysian Financial Reporting Standards (MFRS) 138 as “an identifiable non-monetary asset without physical substance held for use in the production or supply of goods or services, for rental to others, or for administrative purposes”
Is to find out has the value relevance of intangible asset changed after International Financial Reporting Standards (IFRS) has been adopted? Second, to find out is there a significant relationship between value relevance of intangible asset with firm’s performance during pre adoption period of IFRS?
Summary
As the economic environment changes to become more global, the way and nature of the investments being made domestically and internationally change over the time. Intangible assets dominate the environment compared to during industrial era that was dominated by tangible assets (Abubakar, 2015; Zhang, 2018; Okon and Monday, 2017; Edeme, 2018; Almeqdadi, 2018; Setiyawati, et al 2018) These changes have led the role of intangibles to increase to provide a more informative and reflective business performance intended for the investors in the decision-making process which the traditional accounting standards cannot fulfil anymore (Istrate, 2013; Ibrahim and Ali, 2014; Sarwar and Mubarik, 2014; Okoye, 2014; Wilson, et al 2014; Chidoko, 2014; Ekpung, 2014; Kasasbeh, et al 2018; Hawamdeh, 2018; Yu-Chi and Lin, 2018).
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
