The difference between the market value and the book value of the equity of a company is called (based on STEWART) intellectual capital (IC).
Ziel der Begriffsbildung ist es, für die Unternehmung Ansatzpunkte und Wege zu finden, um den Wertunterschied, das IC, besser zu verstehen, zu erklären, und auf Faktoren und Bestimmungsgründe zurückzuführen, die als Value drivers erkannt und optimal gestaltet werden können.
The IC is therefore not just an accounting term, but rather a new management theory that aims to create value. However, factors such as sales, margins and costs are not primarily seen as value drivers, but rather the opportunities to better incorporate the intelligence of management and employees.
In most stock corporations, the market value of equity (number of shares issued multiplied by the price) exceeds the book value of equity as shown on the balance sheet. Similarly, if there is a change of ownership, companies that are not listed on a stock exchange achieve a price that is usually higher than the book value.
This difference was formerly known as goodwill. The business issue associated with goodwill used to be primarily of a tax law nature.
Today the questions are addressed as to how the difference between market value and book value comes about, and by which measures the value of a company can be increased above the book value. The old term goodwill is of little help here. A more convincing answer is that the difference between market value and book value can be traced back to the “intelligence” of a company, which means that it represents “intellectual capital”. The book value (fixed assets and current assets) is symbolically the hardware, the intelligence the software of a company.
The term intellectual capital has a threefold meaning:
1. A positive difference between the market value and the book value can only be explained by the fact that there are other assets in addition to the asset items recorded in the balance sheet. Intellectual capital is an intangible asset item or a class of intangible asset items. Obviously, the name given to the performance of the people working in the company is mentioned in praise, and their contribution to the value of the company is mentioned appropriately. The term shows that it is not only the investors who get the company "up and running" with their money. That is a clever choice of words.
2. Just as there is financial management, management of fixed assets or management of current assets, IC is a doctrine of how this class of intangible assets is to be managed so that the intangible assets work as effectively as possible in the company's performance.
3. The IC is actually not capital in the sense of business administration.
The aim of considering the IC in the sense of the aforementioned management theory is to clarify which types of intellectual capital are to be distinguished, how the individual components are related, with which measures their maintenance and development can be promoted and how these measures at the various levels of a company can be communicated in an understandable manner.
The division of the IC into different classes should be done by the respective company. Arguments are the manageability and the ability to be influenced, but of course industry specifics play a role. Often, following the example of the Swedish insurance group Skandia, a subdivision into human capital, customer capital and organizational capital is chosen. This distinction is then linked to a teaching on how the corresponding intangibles can be created, increased and used more effectively in each class.
The IC management theory therefore emphasizes the process of transforming knowledge into intangibles and the process of effective use. IC is understood as a process. Recall that IC was initially defined as an inventory.
Since, as I said, IC is to be found as an asset at all levels of the company, all employees are involved in this process, transformation of knowledge into intangibles and the effective use of intangibles, so that IC is secured, increased and used effectively. For this purpose, the process is shown as a procedure, a route appropriate to the level at all workstations, with the help of a signpost. This signpost is the so-called navigator.