Intellectual Capital Disclosure: Some Evidence from Healthy and Distressed Banks in Italy

Giuliana Birindelli,Paola Ferretti,Andrea Cosentino,Helen Chiappini

doi:10.3390/su12083174

Giuliana Birindelli, Paola Ferretti + Show 2 more

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https://doi.org/10.3390/su12083174

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Journal: Sustainability	Publication Date: Apr 15, 2020
Citations: 4	License type: CC BY 4.0

Affiliation: University of Chieti-Pescara, University of Pisa

Abstract

The article investigates the intellectual capital disclosure of Italian banks over the years 2016–2017, applying the specific lens of healthy and distressed banks. To this end, we used content analysis and encoding techniques. The main results point out that intellectual capital (IC) disclosure is generally poor and that the intensity of disclosure varies slightly between healthy and distressed banks. Regarding the quality of disclosure, healthy banks present a higher, albeit modest, tendency to disclose non-qualitative and forward-looking information, maybe due to the fact that they are more focused on the strategies and the relationships with stakeholders as opposed to a more short-term approach of the distressed banks. To complement our study on healthy and distressed banks, we repeated the analysis focusing on bank size and independent directors. In this case, results do not show relevant differences in terms of IC disclosure. Hence, our findings suggest the need to consider banks’ IC disclosure as a strategic asset for increasing, among others, transparency and reputation.

Highlights

There is not an unambiguous definition of intellectual capital (IC), there is no doubt that it is focused on the concepts of knowledge and information, as well as their capacity to contribute to the creation of firms’ value [1]
Our results revealed that IC disclosure of healthy and distressed banks does not show widespread differences
To complement our study on healthy and distressed banks, we repeated the analysis focusing on bank size and independent directors

Summary

Introduction

There is not an unambiguous definition of intellectual capital (IC), there is no doubt that it is focused on the concepts of knowledge and information, as well as their capacity to contribute to the creation of firms’ value [1]. We refer to Sveiby’s [4] Intangible Asset Monitor which outlines the external structure (customers), internal structure (organization), and employee competence (people) as IC categories, and provides specific indicators (related to growth, renewal, efficiency, and stability) for each of them Another categorization, proposed by the business navigator Skandia, is anchored on the following business elements: financial, renewal and development, customer, process, and human focus [1]. The Balanced Scorecard identifies different perspectives of analysis, which are: financial, customer, business process, and learning and growth [5] These models are linked by a multi-disciplinary approach, as they define the IC by using both external and internal means that firms may use for achieving future benefits in general and for increasing the creation of value in particular [6]. This helps explain the dynamic character of IC and the reason it could be considered a “phenomenon of interrelationships and interactions, having each component little value if considered per se, but as a whole it represents great value for the organization” [8]

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