Intangible Asset Accounting and Accounting Policy Selection in the Football Industry

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A thesis submitted to the Faculty of Commerce and Social Science of The University of Birmingham for the degree of DOCTOR OF PHILOSOPHY

Department of Accounting and Finance School of Business Faculty of Commerce and Social Science The University of Birmingham July 1998

University of Birmingham Research Archive
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The main aim of this thesis is to evaluate the feasibility of intangible asset accounting in financial reporting with particular reference to the football industry. It also examines related accounting policies. Lack of reliable measurement is the major obstacle to the recognition of intangible assets. The measurement of intangible assets is problematic due to a lack of verification through reference to an active market. However, drawing on Human Resource Accounting, the thesis argues that identifying and measuring human resource assets may be possible in the football industry. The human resource asset, the player registration, is subject to sufficient control through unique industry structures to justify recognition as an intangible asset. The existence of an active market for player registrations facilitates reliable measurement. In the football industry, a wide variety of accounting policies are employed in accounting for player registrations and other material transactions. Hypotheses regarding the reasons for selecting particular accounting policies are developed and tested. Findings suggest that institutional pressure which influences perceptions of legitimacy and credibility can affect the selection of accounting policies. The thesis also develops and tests a model to value player registrations as intangible assets where they are not subject to market transactions. The ability to reliably measure intangible assets is regarded as crucial to their recognition in financial reporting. In addition, it will lead to the acceptance of intangible asset policies as legitimate and credible, despite the market orientated bias of traditional financial reporting.

May I thank and acknowledge the following in producing this thesis; Andrew Thomas for supervision; the Professional Footballers Association, The Football Trust, the Deloitte & Touche Football Industry Team and the football clubs themselves for the provision of information; Timothy Isherwood for data collection, James Cessford, Douglas Leonard, Stephen Thorpe, Alexander Burfitt, Matthew Brough, Ms Blurton, and my family for support, help and inspiration.

Chapter Introduction 1 The Nature and Treatment of Intangible Assets 1.1 1.2 1.3 1.4 The Nature of Intangible Assets The Importance of Intangible Assets Development of Accounting Standards for Intangible Assets in the UK International Accounting Standards for Intangible Assets

Page 1 5


The Measurement of Intangible Assets
2.1 2.2 2.3 Financial Reporting Requirements Valuation Models The Amortisation of Intangible Assets



Human Resource Accounting
3.1 3.2 3.3 3.4 3.5 The Human Resource as an Asset The Relevance of Human Resource Accounting The Measurement of Human Resources The Development of Human Resource Accounting Consequences of Human Resource Accounting



The Football Industry
4.1 The Nature and Structure of the Football Industry 4.2 Finance in the Football...
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