A critical assessment of Stewart's CIV method

This paper seeks to examine the calculated intangible value (CIV) method as a measure of intellectual capital (intangibles) in enterprises. The aim is to show the benefits and disadvantages of the method and its actual relation to intellectual capital.

The authors present a conceptual, theoretical and empirical analysis of CIV to assess its validity as a measure of firm's intangibles.

The result of the analyses is that CIV is connected to all types of capital assets (physical, financial, combined physical and financial and intangible) and thus it does not unambiguously relate or measure firm's intangible value(s). CIV should be seen solely as a measure of financial efficiency derived from companies' return on assets (ROA). CIV measures an overall financial recognized comparative advantage in comparison with competitors within the same branch of industry. There is no evidence to support the simplistic assumption that a company's CIV is a measure of its intellectual capital.

CIV is used quite widely for purposes of measuring intellectual capital in companies and industries. However, its validity has never been subjected to critical examination. The results of this paper provide valuable information on the reliable measurement of intellectual capital and the further development of these measurements.