Global business undervalued by $26.5 trillion, report claims

Adam Hignett
The takeover of firms such as Cadbury crystallised intangible assets such as branding
BRITAIN’s top firms are undervalued and urgent action is required to ensure their shares command a fair price, says the Chartered Institute of Management Accountants (Cima).

In a report undertaken by Brand Finance, Cima warns that directors and governments are in the dark about the true value of assets they control. The report argues the adoption of new accounting methods is the only way to rectify a $26.5 trillion (£17.7 trillion) undervaluing of the global know­ledge economy. The problem could effect jobs and development.

The report found over one-third of an average firm’s value is undis­closed, rising to 70 per cent in sectors such as advertising. The problem of undervaluing is most acute in western nations where service industries make up a large proportion of output.