Abstract
In this study, we explore the association between the intellectual capital (IC) efficiency of firms and their voluntary disclosure of environmental, social, and governance (ESG) information, using data on Jordanian listed firms and the value-added intellectual coefficient (VAIC) model with its three components of human, structural, and relational capital efficiency (HCE, SCE, and RCE, respectively). We find that disclosing environmental information is unrelated to IC efficiency, that disclosing governance information is associated with raised IC efficiency through the HCE and RCE components, and that disclosing social information is negatively associated with IC efficiency through the SCE and RCE components. We also find that releasing information on one or two of the three ESG dimensions has a positive effect on IC efficiency. This evidence has implications for the management of intangible assets.
Highlights
In this study, we examine how voluntary information disclosure on the environmental, social, and governance (ESG) dimensions of firms is associated with intellectual capital (IC) efficiency
By applying the value-added intellectual coefficient (VAIC) model and its three components of human, structural, and relational capital efficiency (HCE, Structural capital efficiency (SCE), and Relational capital efficiency (RCE), respectively), we find that disclosing information on the environmental dimension is not associated with IC efficiency, that disclosing information on the governance dimension raises IC efficiency through the Human capital efficiency (HCE) and RCE components, and that disclosing social information is negatively associated with IC efficiency through the SCE and RCE components
We have explored how voluntary information disclosure on the ESG dimensions of firms is associated with IC efficiency and with each of its components
Summary
We examine how voluntary information disclosure on the environmental, social, and governance (ESG) dimensions of firms is associated with intellectual capital (IC) efficiency. We address how ESG information disclosure is associated with the value of intangible assets as accounted for by the IC efficiency of firms, especially in emerging economies, where intangible assets may play a crucial role in boosting productivity, and where ESG information is crucial to characterizing a firm’s sustainability focus [9] and to signaling its social pledge. We fill this gap by analyzing ESG information disclosure by Jordanian companies. The rest of the paper is organized as follows: the literature is reviewed and hypotheses are developed in Section 2, the data are described in Section 3, descriptive statistics and empirical results are reported and discussed in Section 4, and Section 5 summarizes our findings and our main conclusions
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