Intangible Assets and Firm performance in Europe and Asia: A dynamic GMM Approach

The contribution of intangible assets to a firm's growth is vital, although the emerging economies generally demonstrate meagre endowment with intangibles. The purpose of this study is to identify the effect of intangible assets, firm-specific factors, and its relationship with firm performance as it is pertinent in the backdrop of increasing innovativeness of firms. This paper identifies the effects of intangible assets on firms’ financial performance in Europe and Asia. In order to analyse the financial performance, a sample of large firms for the period 2011-2020 for Europe and Asia is selected from Orbis database. As a performance measure, we use the return on assets ratio. The determinants of firm performance include intangibles fixed assets, tangible assets, size, growth, cash flow and solvency ratio. Results of two step system GMM analysis showed that the relationship between intangible assets, firm specific factors and firm performance are significant.