Abstract
PurposeWhile prior research in the area of intellectual capital (IC) disclosure has mainly focused on firm, board and audit committee characteristics, there is little research on whether managerial characteristics are associated with IC disclosure. This study aims to examine the relationship between managerial ability (MA) and the extent of IC disclosure.Design/methodology/approachThe study sample comprises 1,098 firm-year observations of Iranian listed firms during 2012–2017. This study uses the checklist developed by Li et al. (2008) and adopts a content analysis approach and calculates the IC disclosure index in 62 dimensions within three categories: human capital, structural capital and relational capital. To measure MA, this study uses the managerial ability score (MA-Score) developed by Demerjian et al. (2012) for Iranian firms.FindingsThe results show that MA is significantly and negatively associated with the overall extent of IC disclosure and all the three components of IC (human capital, structural capital and relational capital). Further analysis shows that the interaction between MA and firm performance is positive and significant, suggesting that the negative relationship between MA and IC disclosure is less pronounced for high-performing firms. This study addresses the potential endogeneity issue by using the propensity score matching approach. The findings are also robust to the alternative measure of MA.Originality/valueThis study contributes to both the MA literature and the IC disclosure literature. To the best of the authors' knowledge, this study is the first to provide empirical evidence on the relationship between MA and IC disclosure.
Highlights
IntroductionCompanies have been generating value from securities and financial assets and from intangible assets, such as the skills of employees (human capital), technological innovation and breakthroughs (structural capital) and relationships with customers (direct relational capital), all of which are forms of potential intellectual capital (IC) (Su, 2014; CruzGonzalez et al, 2014; Rossi et al, 2021)
Companies have been generating value from securities and financial assets and from intangible assets, such as the skills of employees, technological innovation and breakthroughs and relationships with customers, all of which are forms of potential intellectual capital (IC) (Su, 2014; CruzGonzalez et al, 2014; Rossi et al, 2021)
This study extends the current literature by examining whether managerial ability (MA) is associated with the extent of IC disclosure in an emerging market (Iran)
Summary
Companies have been generating value from securities and financial assets and from intangible assets, such as the skills of employees (human capital), technological innovation and breakthroughs (structural capital) and relationships with customers (direct relational capital), all of which are forms of potential intellectual capital (IC) (Su, 2014; CruzGonzalez et al, 2014; Rossi et al, 2021). The existing literature suggests that IC plays a significant role in improving the efficiency of both capital and labor markets (Petty and Guthrie, 2000; Bismuth and Tojo, 2008) and increasing the performance and wealth of organizations (Dumay and Roslender, 2013; Muttakin et al, 2015). Some studies have benefited from stakeholder theory to highlight the usefulness of IC information disclosure and argues that it can reduce the asymmetric information and increases accountability. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
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