Business Planning and Evaluation · Chapter 1 · 1.1.4

Value beyond the balance sheet

Extensions of the concept of value in the contemporary economy – intangible capital, data, platforms and ESG.

ProgrammerI · intangible capital
Data engineerII · data
Analystguide
App developerIII · platforms
Sustainability managerIV · ESG

Rolandas Rakštys · Lecturer · Vytautas Magnus University, Agriculture Academy · Faculty of Bioeconomy Development, Department of Business and Rural Development · [email protected] · ORCID 0000-0003-0299-9930

Chapter 1 “Foundations of Business Value”, section 1.1.4 · English translation of v0.16.5 (2026-10-15) · set v1.0.3 · 17 slides, ≈ 35 min

Rakštys, R. (2026). Chapter 1. Foundations of Business Value (English translation of v0.16.5, 2026-10-15). Verslo planavimas ir vertinimas [Business planning and evaluation]. Vytautas Magnus University, Agriculture Academy. https://rakstys.eu/studijos/verslo-planavimas-ir-vertinimas/en/skyriai/ch01/ · CC BY-NC-ND 4.0

Hook · from 1.1.2 and 1.1.3

What were classical models not designed for?

The five-layer ontology (1.1.2) and the dualism of fundamental and market value (1.1.3) provide the analytical basis.

But the 21st-century economy has raised new challenges that classical models were not designed to meet.

I

The dominance of intangible capital

II

Data as an asset

III

The economy of platforms and ecosystems

IV

ESG and societal value

environmental, social and governance (ESG) factors

I · Intangible capital

What were the old models designed for?

intangible capital

The rise of intangible capital is one of the most important structural transformations in valuation theory.

The valuation models of the industrial era were designed for a world in which the principal carriers of value are:

1physically tangible
2reflected in accounting systems
3traded in markets

In the contemporary economy that assumption fits ever less well.

Interactive · Haskel and Westlake (2018)

How is an algorithm unlike a factory?

Intangible assets differ fundamentally from tangible ones in several respects. Click the cards.

flipped 0 / 5

These properties have essential consequences for valuation.

Consequences for valuation

What does the balance sheet not see?

illustrative diagram

Companies may exhibit a high market value relative to the book value of their assets.

Not necessarily “overvaluation”Traditional accounting systems simply do not reflect economically productive stocks of intangible capital (Liu et al., 2009; Crouzet et al., 2022).

Cedergren and co-authors (2018): the value of unrecognised assets has implications for the relation between market valuation and debt valuation. Accounting “blindness” to intangibles distorts the valuation not only of equity but of debt as well.

Research on intellectual capital

Does intellectual capital explain value?

traditional financial capital
+ innovation and human capital

Innovation and human capital carry additional explanatory power for company value, over and above traditional financial capital (Liu et al., 2009; Tseng et al., 2015).

Gamerschlag (2013): the disclosure of human capital is value-relevant even where it produces no direct market price reaction.

II · Data as an asset

Why are data a distinct asset subclass?

data as an asset class

Data are best treated as a distinct subclass of intangible capital, an asset class in their own right, rather than as simply “one more” intangible asset.

Corrado and colleagues, in an OECD working paper, propose that data be defined as an intangible asset and provide experimental estimates of their measurement (Corrado et al., 2022).

no clear market price
≠
economically valuable for decisions

value ≠ an observed exchange price alone

Interactive · Hughes-Cromwick and Coronado (2019)

What makes data valuable?

DATASET PASSPORTfilled in 0 / 6
The value of data depends on specific properties. Fill in the passport – click the fields.

Value comes through possibilities for forecasting, personalisation, coordination and experimentation.

Data network effects

How do data increase returns?

data network effects

Each new user generates data that improve the algorithm for all users.

This creates a dynamic of increasing returns.

Knorr and co-authors (2025): data network effects shape the strategies of platform complementors and the creation of user value.

→ III · platforms and ecosystems
III · Platform business models

Where is value created on a platform?

platform business models

Value is created not within the company alone but within an ecosystem – in the interaction of users, complementors (ecosystem participants who create additional value), standards and data. The locus of value shifts from the individual company to the architecture of the ecosystem.

The theory of network externalities (Katz & Shapiro, 1985) explains why expectations and coordination become fundamental variables for value.

The theory of two-sided markets (Rochet & Tirole, 2003): value is shaped not only by the level of prices but by their structure – how the platform allocates charges between sellers and buyers.

Interactive · Figure 1.3. The value ecosystem of a platform

How does value move on a platform?

Cross-side network effects Use,data generation Services,personalisation Additionalservices Access to theuser base Regulation,standards RegulatorsCompetition, Privacy PlatformGovernance rules,Algorithms, Data UsersDemand, Data, Content ComplementorsApplications, Services
Click the arrows and the nodes. Value is created in the interaction of users, complementors, standards and data.

The value of a platform depends on:

Valuing a platform

What is not enough to value a platform?

Reuschl and co-authors (2021): in sharing-economy business models the configurations of value depend on the control of shared resources and the structure of ownership rights.

Valuing a platform requires more than
a forecast of the company’s cash flows
+
ecosystem rents
+
governance power
+
durability of participation externalities

Traditional discounted cash flow (DCF) and multiples methods struggle to capture the value of network effects, ecosystem rents and winner-takes-all dynamics.

The valuation of platforms is among the most pressing areas of contemporary valuation theory.

IV · ESG and societal value

Is private value equal to societal value?

shareholder value

The classical shareholder value paradigm does not cover the whole field of valuation. ESG factors act on business value through several transmission channels.

Private value and societal value are not the same

A company may create great private value for its shareholders while generating negative externalities – pollution, the depletion of resources.
Conversely, activity that creates great societal value may be financially loss-making.
“external” ESG factors
regulationreputationconsumer behaviourinvestor preferences
“internal” determinants of value
Interactive · Figure 1.4. ESG transmission channels into business value

Through which channels does ESG reach value?

ESG factorsEnvironment, Socialresponsibility, Governance RegulationTaxonomy, CSRD, sustainability standards ReputationBrand, Trust FinancingCost of capital, ESG filters DemandConsumer preferences Business value

Switch on a channel – its path from ESG factors to business value will light up.

Interactive · sustainability value

A cost centre or a source of value?

Choose a view.

The IFRS S1 and S2 sustainability disclosure standards adopted in 2023 (IFRS Foundation, 2023a, 2023b) formalise this view by requiring disclosure of sustainability-related financial effects, opportunities and risks. In the EU, and therefore in Lithuania, sustainability information is disclosed under the CSRD by applying the European Sustainability Reporting Standards; IFRS S1 and S2 are not mandatory in the EU, although their logic is close.

Summary of the section

What remains open?

Four structural transformations extend the boundaries of the concept of business value beyond the classical DCF frame:

the dominance of intangible capitalthe data economyplatform business modelsESG integration

They change the nature of value itself: value is increasingly created not in tangible assets but in relationships, data, ecosystems and institutional context.

The ontological model (1.1.2) integrates these transformations through the strategic and intangible capital layers, but operationalising them – measurement, forecasting, valuation – remains an open methodological problem. More in section 1.1.5 and part 1.2.

APA 7 · works cited in section 1.1.4

References

Cedergren, M. C., Chen, C., & Chen, K. (2018). The Implication of Unrecognized Asset Value on the Relation Between Market Valuation and Debt Valuation Adjustment. Review of Accounting Studies, 24, 426–455. https://doi.org/10.2139/ssrn.2378145

Corrado, C., Haskel, J., Iommi, M., & Jona-Lasinio, C. (2022). Measuring data as an asset: Framework, methods and preliminary estimates (OECD Economics Department Working Papers No. 1731). OECD Publishing. https://doi.org/10.1787/b840fb01-en

Crouzet, N., Eberly, J. C., Eisfeldt, A. L., & Papanikolaou, D. (2022). The Economics of Intangible Capital. Journal of Economic Perspectives, 36(3), 29–52. https://doi.org/10.1257/jep.36.3.29

Dang, T. N., Nandy, M., Lodh, S., & Hussainey, K. (2025). Nature at Risk, Finance at Stake: A Systematic Literature Review of Biodiversity Risk in Finance Research. Business Strategy and the Environment. https://doi.org/10.1002/bse.70398

Gamerschlag, R. (2013). Value Relevance of Human Capital Information. Journal of Intellectual Capital, 14(2), 325–345. https://doi.org/10.1108/14691931311323913

Haskel, J., & Westlake, S. (2018). Capitalism Without Capital: The Rise of the Intangible Economy. Princeton University Press.

Hughes-Cromwick, E., & Coronado, J. (2019). The Value of US Government Data to US Business Decisions. Journal of Economic Perspectives, 33(1), 131–146. https://doi.org/10.1257/jep.33.1.131

IFRS Foundation. (2023a). IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information. https://www.ifrs.org/issued-standards/ifrs-sustainability-standards-navigator/ifrs-s1-general-requirements/

IFRS Foundation. (2023b). IFRS S2 Climate-related Disclosures. https://www.ifrs.org/issued-standards/ifrs-sustainability-standards-navigator/ifrs-s2-climate-related-disclosures/

Katz, M. L., & Shapiro, C. (1985). Network Externalities, Competition, and Compatibility. American Economic Review, 75(3), 424–440.

Knorr, C., Erath, M., Saesen, J., Kindermann, B., & Strese, S. (2025). What Role Do Data Network Effects Play for Multihoming Complements? Electronic Markets, 35. https://doi.org/10.1007/s12525-025-00817-4

Liu, D., Tseng, K., & Yen, S. (2009). The Incremental Impact of Intellectual Capital on Value Creation. Journal of Intellectual Capital, 10(2), 260–276. https://doi.org/10.1108/14691930910952650

Reuschl, A. J., Tiberius, V., Filser, M., & Qiu, Y. (2021). Value Configurations in Sharing Economy Business Models. Review of Managerial Science, 16, 89–112. https://doi.org/10.1007/s11846-020-00433-w

Rochet, J.-C., & Tirole, J. (2003). Platform Competition in Two-Sided Markets. Journal of the European Economic Association, 1(4), 990–1029. https://doi.org/10.1162/154247603322493212

Tseng, K., Lin, C. I., & Yen, S. (2015). Contingencies of Intellectual Capitals and Financial Capital on Value Creation. Journal of Intellectual Capital, 16(1), 156–173. https://doi.org/10.1108/JIC-04-2014-0042

Yadav, A. (2025). Financial Distress, ESG Practices and Firm Valuation: Comparing Pre- and Post-Paris Agreement Periods. Management Decision. https://doi.org/10.1108/md-05-2024-1159

Rakštys, R. (2026). Chapter 1. Foundations of Business Value (English translation of v0.16.5, 2026-10-15). Verslo planavimas ir vertinimas [Business planning and evaluation]. Vytautas Magnus University, Agriculture Academy. https://rakstys.eu/studijos/verslo-planavimas-ir-vertinimas/en/skyriai/ch01/ · CC BY-NC-ND 4.0

These slides are based on the textbook Verslo planavimas ir vertinimas [Business Planning and Evaluation]. The text was translated, structured and visually laid out with the help of artificial intelligence tools (Claude), following the protocol for working with AI and the verification procedures set by the author.

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