This paper argues that how firms convert their organization renewing combined with intellectual assets into their firm value. Intellectual assets are defined as intangible elements that are generated by firms’ value creating activities and are expected to generate future cash flow or lower cost of capital. Many firms are renewing organizations by building or utilizing intellectual assets, such as, customer assets, business process assets, value-added premium divisions, etc. On the other hand, it turned out that the market community including fund managers and buy-side analysts also used intellectual assets as non-financial information when they amend their assessment of future cash flow or cost of capital of firms. The issues to be solved are, how firms convert their organization renewal efforts into the market value by investor relations activities including the voluntary disclosures and those prescribed by rules.

The purpose of this paper is to explore the possibility of converting communication effects of advertising measured qualitatively into brand value measured monetarily in advertising budget setting. In the first half of the paper, we build a model to calculate net present value of advertising budget as an investment with little consideration of the concepts of brand in advertising and marketing research. And, in the second half, we try to revise the model to make possible the introduction of non-monetary factors to advertising budget setting. A key of the revision is the new estimation method of discount rate in discounted cash flow analysis. Estimated discount rate used in the revised model based on the concepts of brand equity means the perceived risk of future incremental cash flow. Stakeholders perceive relatively low risk of future cash flow accrued from strong brands. Therefore, building strong brand through advertising is linked to increasing brand value measured in monetary terms. Our new way of thinking can be applied to setting of advertising budget as strategic investment.

Unlike properties, the peculiarity of corporate value is that it varies according to its ownership. That is because corporate value depends on future cash flow. As art and jewelry are evaluated by their static value, corporation is evaluated by its dynamic value. In this article, the cylinder model is used to evaluate the corporate value. I show the relationship between the corporate value and the intangibles assets’ value, and how corporations are evaluated in M & A.

In evaluating corporate value, asset value used in operation is not an important factor, but it must be done by the future cash flow (CF). On the other hand, DCF (Discounted Cash Flow) must be evaluated by the future CF. However, DCF varies greatly according to its assumptions. I show values of corporations in Japan have their points of discontinuity according to their ownership, and that each evaluation result of Intangibles dose not influence the evaluation of the corporation on the whole.

In this paper, I examine the innovation chain that is composed of inputs→intermediaries→outputs in R & D investment project. Inputs are the basic research investment aimed at creating innovation capabilities or new knowledge, the product development investment, and the process R & D investment such as efforts to increase the efficiency of production. Intermediaries are the stock of technological knowledge by which inputs are converted to outputs. Measurement difficulties concerning with the stock of technological knowledge are originated from no rivalry or nonappropriability and inherent high risk. Nonfinancial measures such as patent expiration dates, products off patents, anticipated development completion dates, FDA drug approval, a beta test for soft program, etc. are used to measure the stock of technological knowledge.

Outputs may be indicated by revenues from patent sales and royalties, sales of differentiated products, and measurable cost saving. To maintain consistency with the metrics of the corporate value, management should use DCF or the present value of excess earnings to measure the anticipated efficiency of R & D investment project. To evaluate DCF or the present value of excess earnings, we forecast project economic life period, future cash flow streams or future excess earnings, and the cost of capital.

In 1965, Anthony proposed the framework; Strategic Planning, Management Control and Operational Control. Since then, the theory of management control that extended the boundaries was developed. According to that development, the theory of strategic management accounting was proposed. There are some opinions on the position of strategic management accounting in the framework of management accounting. Therefore in this paper, I consider the role of strategic management accounting, and argue the framework of management accounting and the position of strategic management accounting in the framework. The function of period performance measurement, which is required because management accounting is accounting, should be regarded as important in the argument about the framework of management accounting. Therefore strategic management accounting that focuses on strategy formulation and project planning and does not consider period performance measurement should not be positioned on management control, and should be positioned on strategic planning.