Abstract
PurposeThe impact of the intellectual capital disclosure (ICD) on the cost of equity capital (COEC) is not well established in the aspect of the Indian scenario. So the objective of this paper is to examine not only the overall effect of ICD but also the individual effect of human capital disclosure (HCD), relational capital disclosure (RCD) and structural capital disclosure (SCD) on COEC.Design/methodology/approachThis research work is conducted by regressing COEC, firm size, leverage, industry type and disclosure index. The disclosure index is prepared based on content analysis of disclosure made in the annual reports of a sample of 50 companies listed in the Nifty 50 index for the year 2018–2019. But in this paper 20 companies are eliminated due to their negative COEC and rest 30 companies are used as the sample companies for this study.FindingsThe outcome of this study indicates a negative association between the disclosure of intellectual capital (IC) as a whole and the COEC. But a negative association only for two components (human capital and structural capital) with the COEC is found only when the association of COEC with the categories of ICD is considered.Originality/valueThis is the first study that examines the nexus between the level of ICD and its impact on the COEC in India context.
Highlights
In the globalization era, corporate governance is considered as an important part in analyzing the corporation
The result of this study shows that there is a lower level of disclosure of intellectual capital (IC) information by the Indian firms, the cost of equity capital (COEC) is negatively associated with the overall intellectual capital disclosure (ICD) level in general and human capital and structural capital in particular
The objective of our study is to analyze the effect of ICD on the COEC in the perspective of selected Indian companies
Summary
Corporate governance is considered as an important part in analyzing the corporation. The practices and quality of public disclosure of corporate governance of a corporation have been provided more importance to the stakeholders to know what is reported and how. Disclosure is considered as an important element of good corporate governance as well as transparency about the corporate performance, operations, transactions and risk management The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/ legalcode
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