Bestselling Books on Intangible Assets

Democratic Capitalism

Former CEO of ADT Ray Carey notes in his new book Democratic Capitalism that despite the evidence of the practical effectiveness of democratic capitalism, companies implementing such a strategy have proved the exception to the rule. The dominant business culture has instead trended towards what Carey calls 'ultra-capitalism,' the modern system of finance-driven capitalism that Carey believes places too great of an emphasis on speculation, individual greed and excess. This has led to a disconnect between ownership and control, a widening gap between the super-rich and the common working person, a shifting of the tax burden from capital to labor, and a deterioration of regulatory safeguards to protect workers and their companies.

In Carey's view, the lack of a strategic focus on integrating workers into the capital structure of the company makes it increasingly difficult to provide them with access to the wealth-creating power of private enterprise.

Carey believes that a "synergistic coupling of democracy and capitalism" offers a superior vision of global commerce that will more effectively spread the economic benefits of the free enterprise system by ensuring more workers have direct access, through ownership, to the wealth-creating capacity of the corporation. His vision of democratic capitalism advocates a systemic application of ideas involving broad-based ownership, profit sharing, and employee involvement.

More info on the book Democratic Capitalism plus ordering information can be found at http://www.democratic-capitalism.com.

Baruch Lev on Intangibles in Harvard BR

In an interesting HBR article (June 2004), Lev concludes that both investors and managers are underestimating the value of R&D and other intangibles investments.
As a result, managers shift resources from R towards I and corporations, being undervalued, face higher cost of capital then necessary.

Five reasons are given for the undervaluation of intangibles:
1. the information about the investment in intangibles and about their returns is hard to get at (requires better valuation methods)
2. providing this information is not (yet) obliged by GAAP and other accounting systems (requires change by accounting bodies),
3. intangibles viewed as assets rather then as costs (requires a change of mindset),
4. disclosing of intangibles value may be used by competitors (find the optimal amount and timing to disclose information to prevent loosing competitive edge)
5. possible litigation exposure (in case of missed future forecasted value)

I wonder if these 5 reasons cover all factors involved in this undervaluation?