According to Roger Marshall (2014), the knowledge-based companies are often capital light due to their business processes are based on the knowledge assets rather than physical assets. However, those companies are always having huge market value which shows there might be some intangible assets have not recognized which will not reflect the firm’s true value. Therefore, a quality disclosure of intangible assets is required for those companies. Blaug and Lekihi (2009) further supported that financial statement and report are no longer providing comprehensive analysis for knowledge-based companies; therefore, the value paradox of intangible assets may not be solved as it is more difficult for qualifying the extra value of intangible assets. In that case, it is may not enough for investors and shareholders to make a well-informed decision. Based on the OECD’s research (2011), not only knowledge-based companies increase their intangible assets disclosures but also younger companies, which also supported by Sanchez (2011)’s project which carried out by expertise from academia, government and companies in Spain in 2010 showed that a reliable and comparable disclosure of intangible assets is highly beneficial from these companies. Disclosure intangible assets not only benefit those kinds of companies but their shareholders. Holland (2004) explained that sometimes shareholders are more ease to overlook corporate intangibles; companies should have disclosures of intangible assets to tell shareholders how they created value and how much value is created by the intangible assets. Therefore, it is crucial to disclose intangible assets to inform shareholders that will understand the importance of intangible assets. However, Paugam (2014) argues that it is not necessary for those companies to disclose their intangible assets as intangibles generate wealth for companies in the long-run, it will eventually showed up in firm’s statement.
Moreover, Amir and Lev (1996) complement that non-financial information appears more relevant in stock price for cellular companies instead of traditional accounting disclosures and Amir and Lev (1996),Tasker (1998) and Lev and Zarowin (1999), they indicate that the accounting disclosures alone would be inadequate for firm with substantial intangible assets, therefore, companies cannot simply reply on disclose intangible assets.