Firm‐specific determinants of intangibles reporting: evidence from the Portuguese stock market

Abstract

PurposeThis paper seeks to identify factors that influence the voluntary disclosure of intangibles information in annual reports of Portuguese listed companies.Design/methodology/approachAn index of the voluntary disclosure of intangibles is constructed based on analysis of the Management Report and Chairman's Letter of all 56 companies listed on Euronext Lisbon at 31 December 2003. Several hypotheses about associations between that index and eight firm‐specific variables are tested.FindingsThe voluntary reporting of intangibles is found to be influenced significantly by size, ownership concentration, type of auditor, industry and listing status in univariate analysis; and by size, industry, type of auditor, and ownership concentration (and listing status to a lesser extent) in multivariate analyses.Research limitations/implicationsThis study focuses on annual reports only, and is cross‐sectional. The use of content analysis and the subjective judgment involved in constructing the index cannot be view uncritically. The small sample size is inevitable because of the small Portuguese capital market.Practical implicationsAccounting regulators will be better able to understand the factors that explain the voluntary disclosure of intangibles by firms and use this in developing future recommendations.Originality/valueThe paper validates some previous research and also provides insights to the firm‐specific factors that explain voluntary disclosure of intangibles by companies operating in the small share market of a European country in which capital market fund raising is not regarded to be an important source of financing.