Empirical Research On The Relationship Between Property Rights Arrangements Of Intangible Assets And Firm Value

This paper explores the relationship between intangible assets (Including trade mark, lands and intellectual property rights) and firm value from the perspective of property rights theory. The samples are the firms which finished IPO between 1999 and 2006.Previous papers on intangible assets are focused on the areas of measuring, disclosing and direct value relevance. After reviewing the related papers, we argue that the arrangements of intangible assets before IPO can significantly affect firm value after IPO. Looking from the perspective of property rights and private control rights, we believe if the parent company owns the intangible assets then the listed company is more likely been harmed. This is because the parent company can use intangible assets as a mean of tunneling. Comparing with the other means of tunneling, we think using intangible assets is harder to be discovered.Empirical study shows that for trademarks and intellectual property rights, losing the ownership of property rights are significantly negatively related with firm value, and"getting for free"or"using for free"are better than"paying"for intangibles. But for land we get different results. It is because land is different with trademark and intellectual property rights. Lands are homogeneous in nature, and usually they couldn't bring the listed company much abnormal return. Also for lands"getting for free"or"using for free"is not significantly better than"paying"for intangibles when we use firm value as a measurement.At last we checked some control variables."Reform of non-tradable shares variable"is significantly positively related with firm value, and abnormal related party transaction is significantly negatively related with firm value. But the interaction of the above two variables is significantly positive relationship with firm value.