Demand and Supply of Information on Intangibles: The Case of Knowledge-Intense Companies

This doctoral thesis has its theoretical origin in the notion that the information flow between management teams, financial analysts and investors is especially exposed to information asymmetry when knowledge-intense companies are concerned. Information asymmetry may aggravate agency problems and risk causing an impairment of the efficient allocation of capital on the stock market. Therefore, the thesis examines different aspects related to the presence of intangibles in the information flow surrounding the valuation of knowledge-intense companies. The thesis includes four independent, but related essays. The first essay starts with reviewing classifications developed for internal strategic decision-making and external reporting, respectively, in order to make a synthesis as to which categories of intangibles they chiefly centre on. Empirical studies are also reviewed to examine if the identified categories of intangibles are found to enhance the corporate value-creation process. Considering the importance of annual reports and analyst reports in the information flow surrounding the valuation of companies, the second and third essays then examine to what extent and which categories of intangibles management teams and financial analysts focus on in annual reports and analyst reports, respectively. Differences in focus are analysed to ascertain if there is an information gap with regard to the categories of intangibles management teams and financial analysts centre their reports on. The findings that both parties focus their disclosures of information on intangibles upon R&D and different company relations, form the base of the fourth essay. In this essay it is examined if information related to the signing of an R&D collaboration agreement de facto is valued by investors on the stock market. Throughout the empirical studies, the focus is on Nordic companies belonging to the knowledge-intense industries: pharmaceuticals, biotechnology and health care equipment & supplies