The Impact of Intangible Assets on Financial Performance: Saudi Basic Materials Companies

(Najla Ibrahim Abdul Rahman and Arwa Saad Al Jehani)

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Abstract

This study aims to understand the effect of intangible assets on financial performance by analyzing a sample of companies in the basic materials sector listed in the Saudi financial market during the period 2011¬¬–2018. The study was based on the case study methodology, as for the study specimen was chosen randomly, consisting of five companies, namely SABIC, Saudi Kayan, Maaden, Sipchem Saudi Arabia, and Altasnee. The data was collected from the Tadawul website. Financial ratios were calculated and analyzed using SPSS, a statistical analysis software. The results of the study confirm that intangible assets do have an impact on the financial performance of the sample due to a statistically significant relationship between intangible assets and returns on assets, equity and share. The study recommends that Saudi joint-stock companies increase their investment in intangible assets and expand the disclosure of items of intangible assets in their financial statements. This will contribute towards transparency around the sources of those assets and this focus will, in turn, show their impact on financial performance. 

KEYWORDS
Accounting disclosure, goodwill, profitability indicators

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