- Intangible assets have grown significantly, but company accounting practices haven't reflected that shift
- This has created a challenge for shareholders as they attempt to spot gaps between companies’ expectations and their realities
The way that companies spend their money has changed significantly in just a few short decades. These days, intangibles – assets that are not physical, such as customer relationships – make up a much greater proportion of total equity than they used to. At the same time, the proportion of tangibles – physical assets, such as factories and machinery – has shrunk. Such a shift has come hand-in-hand with the advent of the ‘Information Age’.
That’s according to recent research from Morgan Stanley’s Counterpoint Global Insights wing, titled ‘One job: Expectations and the Role of Intangible Investments’ authored by Michael Mauboussin and Dan Callahan.