Métodos de Recolección de datos Encuestas

It was shown in Chapter 2 that following the adoption of AIFRS and the introduction of AASB 138, accounting for intangible assets has become more restrictive. In Chapter 3, it was revealed that this change in accounting practice has generated much discussion and prediction especially with regards to the usefulness or value relevance of intangible assets. A review of the literature on the impact of AIFRS adoption on intangible assets, however, provided only very limited empirical evidence. Therefore, the aim of this section is to develop hypotheses regarding the impact of AIFRS implementation on the value relevance of intangible assets.

5.3.1 Accounting Choice for Intangible Assets and the Value Relevance of Intangible Assets: The Post-AIFRS Period

With the adoption of AIFRS in 2005, reporting for intangible assets has become more restrictive. Therefore, it can be predicted reasonably that there will be a change in the value relevance of intangible assets. Nevertheless, the effect of the adoption of AIFRS in relation to intangible assets depends primarily on firms’ accounting policies in the pre-AIFRS period. The inability to capitalise research expenditure associated with the research phase of internally generated intangible assets, the de- recognition of specific internally generated intangible assets and the inability to revalue identifiable intangible assets for which there is no active and liquid market could reduce the relevance of the intangible assets in the balance sheets of firms previously engaging in such accounting practices (Chalmers and Godfrey, 2006).

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It was highlighted in Chapter 3 that accounting practices in the post-AIFRS period have the potential to reduce information flows to the market mainly because managers are no longer able to signal information that is useful for firm valuation. Further, Chalmers et al. (2008) find no evidence to support the contention that the post-AIFRS measurement of identifiable intangible assets reflects valuation-relevant information incremental to that conveyed under pre-AIFRS measurement. Thus, the expectation in this study is that firms that previously chose to capitalise their intangible assets will have higher value relevance of intangible assets in the pre- AIFRS period compared to the period after the adoption of AIFRS. The hypothesis, expressed in the alternative form is:

H3: The value relevance of intangible assets for firms that choose to capitalise intangible assets is higher during the pre-AIFRS than the post-AIFRS period.

5.3.2 Firm Life Cycle, Accounting Choice for Intangible Assets and the Value Relevance of Intangible Assets: The Post-AIFRS Period

The expectation on the effect of the adoption of AIFRS on the value relevance of intangible assets presented in Section 5.3.1 also extends for firms across their life cycle stages. This implies that growth and mature firms that chose to capitalise are more likely to have higher value relevance in the pre-AIFRS period compared to the post-AIFRS period. Further, the value of growth firms comprises largely growth opportunities, which means that growth firms are more likely to suffer from the problems associated with information asymmetry compared to mature firms. As a consequence, it is predicted that the substantially restrictive standard on intangible assets in the post-AIFRS period will remove or reduce managers’ ability to communicate credible signals about their quality.

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Hence, it is proposed that the effect in the change of value relevance of intangible assets is likely to be more pronounced in growth firms. The next hypothesis, expressed in the alternative form, is:

H4a: The effect of the change in the value relevance of intangible assets between the pre- and post-AIFRS periods is higher for growth firms than mature firms.

Due to the very limited growth opportunities and difficulties in formulating the estimates for intangible assets, decline firms are expected to choose to expense these assets in both the pre- and post-AIFRS periods. If decline firms maintain the expensing method, then there will be no significant impact on the value relevance of intangible assets information for these firms. However, some firms may choose to capitalise in the pre-AIFRS period. As firms in the decline stage have the least amount of profitable future growth opportunities compared to growth and mature firms, it is expected that the effect in the change of value relevance of intangible assets is the lowest for these firms. Hence, it is hypothesised, in the alternative form, that:

H4b: The effect of the change in the value relevance of intangible assets between the pre- and post-AIFRS periods is lower for decline firms than mature firms.

5.4

Summary

In this chapter, six hypotheses are developed concerning the relationships among firm life cycle stages, accounting choice for intangible assets and the value relevance of these assets. The first three hypotheses in Section 5.2 explore the relationships within the pre-AIFRS context and examine: (1) the effect of accounting choice for intangible assets on the value relevance of the assets; and (2) the moderating effect

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of firm life cycle stages on the association between accounting choice and value relevance. Section 5.4 presented three hypotheses concerning the impact of AIFRS adoption on the relationships among firm life cycle, accounting choice and value relevance by comparing the pre- and post-AIFRS periods.

The following chapter describes the firm life cycle and the Ohlson (1995) frameworks as well as the research design that will be used to operationalise the testing of the hypotheses.

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