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The powerful, growing measure of company performance
Intangible assets are becoming increasingly important for investors measuring the value of their portfolios, according to new research.
The powerful, growing measure of company performance
Intangible assets are becoming increasingly important for investors measuring the value of their portfolios, according to new research.
Traditionally, investors look at the fundamentals of a business as well as financial results, such as the balance sheet of a corporation, before investing money into it.
However, a study by US-based research and ratings firm Ocean Tomo found that up to 84 per cent of the value in a stock is in its intangible assets. These are essentially assets to the corporation that are not physical, including reputation, copyrights and intellectual property.
According to the firm AMO Strategic Advisors, important factors that drive up the value of intangible assets include the quality of financial management and how a company’s people are managed.
Angus Maitland, co-chairman of AMO and founder of Maitland AMO, believes corporate reputation is becoming a powerful indicator of how a company may perform in its market.
“In a world of growing complexity and rapid-fire stock market volatility, investors are increasingly sensitive to the strength of a company’s reputation as they assess their models,” said Maitland.
Anthony Tregoning, managing director of financial and corporate relations, believes that, in Australia following the royal commission, this has become even more important.
“Australian companies can achieve disproportionate impact by changing perceptions in just a small number of reputation drivers, obtaining higher returns on their investment in communication,” said Mr Tregoning.
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