Constructing and employing the appraising model of intangible assets

Authors: Grace T. R. Lin; Yung-Chi Shen; Ju-Feng Hu; Chia-Chi Sun;

Journal: Chia Da Management Review. Dec. 2009, 29(2): 131-161.

Keywords: VIKOR; Intangible Assets; Value Drivers; Analytic Hierarchy Process; Evaluation Model; Hi-tech Industry; Business Appraisal; VlseKriterijumska Optimizacija I Kompromisno Resenje VIKOR

Abstract:
This paper does not intend to actually valuate intangible assets but focuses to investigate the relative value distribution of corporate intangible assets, and this links closely to the concept and application of value drivers. That is because we believe that drivers or attributes of the value significantly determine how virtual value of these intangibles can be created for companies. We apply the analytic hierarchy process (AHP) to the appraising process of intangible assets. The AHP method can mainly sort the non-financial value drivers in order according to their weighted contributions. The key purpose of this paper is to construct a tentative model for the evaluation of intangible assets, which helps business to more correctly appraise corporate value ratios and avoid bias due to mainly relying on financial statements when measuring an entity value. In addition, in view of the significant proportion of intangible assets over total assets in high-technology industries, this research then takes six industries in Hsinchu Science Park and one virtual case as the research objects in order to test the applicability of our model, as well as exploring the value weights of intangible assets and its evaluation amongst different high-technology industries. Besides, the empirical result of this paper is mainly to support business appraisal and thus improve the effectiveness of value based management.