SEC task force urges companies to report intangible assets

WASHINGTON: A Securities and Exchange Commission (SEC) task force

has recommended companies give investors more information on intangible

assets, which will include brands, consumer loyalty and business


The implication for IR strategy is clear: it could introduce a whole new

reporting paradigm. The study does not suggest such reporting should be

mandatory, but market pressure could make it impossible for competitive

companies to avoid doing so.

A company's PR strategy may also be put under greater scrutiny if it is

considered an intangible asset.

"To the extent that a company has a really effective PR effort, and you

could show that it is not only effective but that it lasts over a long

period of time and has created some kind of competitive advantage, then

it might be considered an intangible asset," said Jeffrey Garden, dean

of the Yale School of Management and the task force chairman.

Louis Thompson, president and CEO of NIRI, said reporting intangibles

has been discussed since the mid-1990s. The restriction on face-to-face

discussions with analysts as a result of Reg. FD may offer an easy way

to transition to reporting intangibles.

"If you are worried about what you can say, then talk about these

factors," he said. "Even though the sell side hasn't figured out they

are important, the institutional investors do look at them," he added.

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