The Effects of Emerging Market Traits on the Relationship Between Intangible Assets and Company Performance: Evidence from a Multi-Level Model

This study investigates the contribution of intangible assets to financial performance and market valuation in emerging economies, controlling for specific features of the latter. The authors developed a multi-level model using the value-added intellectual coefficient and its components as independent variables; financial ratios as dependent variables; and emerging markets’ traits, proxied by the global competitiveness index, as controls. Regressions were performed using nine years of data on manufacturing companies from Chile and Peru and their global competitiveness indexes. Intangible assets are positively associated with firms’ market valuation, and controls improve models’ explanatory power. The results confirm the importance of intangible assets in emerging markets and broaden understanding of the crucial role of their traits in value creation. Their effects vary with variables, countries, and periods. Considering these factors would contribute to sound investment decisions and policymaking. Additional contribution is the assessment of literature on intangible assets in Latin America.