Do intangible assets always create value? The conditional effect of profitability and valuation in the Indonesian market

Amlayasa, Anak Agung Bagus and Rudiawarni, Felizia Arni and Sulistiawan, Dedhy and Radu, Valentin and Putra, I Made Wianto (2026) Do intangible assets always create value? The conditional effect of profitability and valuation in the Indonesian market. Investment Management and Financial Innovations, 23 (1). pp. 264-276. ISSN 1810-4967; E-ISSN 1812-9358

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Abstract

Intangible assets play a significant role in the New Economy period we currently live in, yet their capitalization remains challenging due to high failure rates in innovation. The purpose of this study is to investigate the circumstances under which businesses have the potential to raise the future value of using their intangible assets. This study used publicly listed firms on the Indonesia Stock Exchange (IDX) from 2019 to 2024. The final sample comprises 1,974 firm-years that satisfy the selection criteria. A multiple regression analysis was carried out for the assessments. The findings show that the sole possession of intangible assets is insufficient to raise the value of the companies and explicitly shows a negative effect (coefficient = –0.1443, t-value = –2.406). However, the interaction tests reveal that to boost future excess returns, businesses possessing intangible assets are required to demonstrate earnings growth (coefficient = 0.0142, t-value = 2.388) and a strong price-to-book ratio (coefficient = 0.0627, t-value = 7.441). Furthermore, a sector-specific analysis reveals that these results diverge for the technology and healthcare sectors, where intangible assets fail to explain future excess returns (F-statistics = 3.912 and 8.299, respectively). This investigation suggests that the impact of intangible assets on firm value is not uniform; rather, it is contingent upon specific corporate financial fundamentals and industry contexts, proving that investors require validation of innovation through profitability and market strength.

Item Type:	Article
Uncontrolled Keywords:	intangible, assets, innovation, returns, earnings, valuation, Indonesia, R&D
Subjects:	H Social Sciences > HF Commerce > HF5601 Accounting
Divisions:	Faculty of Business and Economic > Department of Accounting
Depositing User:	Ester Sri W. 196039
Date Deposited:	06 Mar 2026 09:26
Last Modified:	06 Mar 2026 09:26
URI:	http://repository.ubaya.ac.id/id/eprint/50412

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