The Role Of Accounting In High Technolo

The British Accounting Review 46 (2014) 309e322

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The role of accounting in high-technology investments
Julia A. Smith*, Renzo Cordina 1
Department of Accounting & Finance, University of Strathclyde Business School, Curran Building, 100 Cathedral Street,
Glasgow G4 0LN, UK

a r t i c l e i n f o

a b s t r a c t

Article history:
Received 17 September 2012
Received in revised form 20 February 2014
Accepted 3 March 2014
Available online 26 March 2014

We present new qualitative empirical evidence from a series of interviews with representatives of venture capital support organisations, which discusses the role of accounting in high-technology investments. Our discussion is framed around three propositions on: whether or not the stewardship role of accounting still holds; the usefulness, or otherwise, of accounting information in the valuation of high-technology investments; and assessing the value of intangible assets in the investment decision. We find that accounting no longer plays such a strong stewardship role, certainly for the venture capital investor.
Further, its role in enabling investors to make decisions on how, when and how much to invest is limited. We propose that standard setters take this on board in revising reporting requirements. Ó 2014 Elsevier Ltd. All rights reserved.

Keywords:
Venture capital
Accounting information
High-technology
Intangible assets

1. Introduction
This article explores the issues surrounding the usefulness of financial accounting to a specific type of investor; the venture capitalist. However, not only does it consider the venture capital investor as an interested party, but also it focuses more specifically on those who make investments in high-technology areas; those areas in which technology is seen to be ‘cutting edge’, or the most advanced technology available. This might be in life sciences technology,

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