Impact of Intangible Assets on Cash Flows and Operating Efficiency: An Empirical Analysis of Listed Companies of PSX

Abstract

In the modern business era of competition, companies must find ways to survive in the market and 
try to maintain an upper hand over competitors. It is evident from the literature that investment in 
intangible assets is as significant as investment in tangible assets. This study is based on finding 
the relationship between the intangible assets and cash flows from operating activities and 
operating efficiency with the control variables of company age and company size by taking the 
panel data of companies listed on the Pakistan Stock Exchange (PSX) from 2007-2017. STATA 
software was used to analyze the panel data of selected companies and found that the intangible 
assets significantly positively impact the operating cash flows. In contrast, intangible assets have 
a negative impact on the operational efficiency of PSX's non-financial companies. To reap the 
benefits of intangible assets through improved cash flows, the management of the companies must 
set policies and procedures to manage the operating expenses.