Valuation of Intellectual Capital: an Investor's View

Abstract

In the innovative economy, digital companies, such as Apple, Microsoft, Alphabet (Google) and others, take the first places in terms of market capitalization. The large gap between the market and book value of these companies proves that they have hidden assets, called "intellectual capital". For the investor, information about intellectual capital is closed; the investor can only guess about its structure and value. Any assumptions about the value and components of intellectual capital are built by the investor on the basis of unverified data. In this matter, the investor can be easily manipulated. The purpose of this study is to reveal the essence of intellectual capital, analyze the structure and methods for assessing intellectual capital, develop proposals for possible options for disclosing information about the structure and value of intellectual capital for investors. In the course of the study, scientific publications concerning the problems associated with intellectual capital were analyzed, and the methods used to assess the value of a business were also used. As a result of the study, the authors proposed the structure of intellectual capital and an algorithm for calculating its value, substantiated the need to introduce the section “Intellectual capital” into the annual reporting, where the maximum possible information about its structure and cost of components will be disclosed.