The Determinants of External Financing Sources for Intangible Asset Investment

Abstract

As corporate competitiveness shifts from tangible to intangible assets, financing for uncertain intangible asset investments has become increasingly important. In this study, using a case study approach, we analyzed the decision-making process of Netflix, which significantly enhanced its corporate value through intangible asset investments, by choosing the issuance of corporate bonds as a means of financing. Two hypotheses were tested concerning the trade-off between financial distress risk and tax benefits, as well as information asymmetry between managers and investors, and both were confirmed. The results show that the financing choice for intangible asset investments aligns with traditional financial theory and emphasize the need for managers to understand these theories and communicate effectively with investors.