• ISSN: 2010-023X (Print)
    • Abbreviated Title: Int. J. Trade, Economics and Financ.
    • Frequency: Bimonthly
    • DOI: 10.18178/IJTEF
    • Editor-in-Chief: Prof.Tung-Zong (Donald) Chang
    • Executive Editor: Ms. Cherry L. Chen
    • Abstracting/ Indexing:  ProQuest, Crossref, Electronic Journals Library , EBSCO, and Ulrich's Periodicals Directory
    • E-mail: ijtef@ejournal.net
IJTEF 2013 Vol.4(5): 252-258 ISSN: 2010-023X
DOI: 10.7763/IJTEF.2013.V4.296

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Firm Life Cycle and the Value Relevance of Intangible Assets: The Impact of FRS 138 Adoption

Hartini Jaafar and Hazianti Abdul Halim
Abstract—This study examines the relationship between accounting choice for intangible assets and their value relevance as well as the moderating effect of firm life cycle on this relationship before and after the adoption of FRS 138 Intangible Assets in accordance with the International Financial Reporting Standards (IFRS) in 2006 in Malaysia. The sample used in this study consists of 2,042 and 2,289 firm-years for the pre-and post-IFRS period, respectively which are classified into three life cycle stages; Growth, Mature and Decline. The findings indicate that during the pre-IFRS period, capitalized identifiable intangible assets are regarded by the Malaysian market as value relevant. The results also suggest that although there is a significant difference in value relevance between Growth and Mature firms, the same effect is not present between Mature and Decline firms. A comparison between the pre- and post-IFRS period suggests that the market attaches higher value relevance to identifiable intangible assets after the adoption of IFRS. The findings also show that there is no significant difference with regards to the impact of the adoption of FRS 138 among all three firm life cycle stages.

Index Terms—FRS138, value relevance, firm life cycle.

Hartini Jaafar and Hazianti Abdul Halim are with the Department of Accounting and Finance, Faculty of Management and Economics, Universiti Pendidikan Sultan Idris, 35900 Tanjong Malim, Perak, Malaysia (e-mail: hartini@fpe.upsi.edu.my, hazianti@fpe.upsi.edu.my).


Cite:Hartini Jaafar and Hazianti Abdul Halim, "Firm Life Cycle and the Value Relevance of Intangible Assets: The Impact of FRS 138 Adoption," International Journal of Trade, Economics and Finance vol.4, no.5, pp. 252-258, 2013.

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