Abstract
This exploratory study investigates the extent to which 82 New Zealand local government authorities report intellectual capital in their annual reports. A disclosure index, constructed with the assistance of a 14-member local government stakeholder panel, was applied to the annual reports as part of a content analysis. Findings indicate that the overall level of intellectual capital disclosure was varied, with the majority of disclosures being narrative in nature. Findings also indicate that despite a significant portion of total annual expenditure being attributed to employees/staff, the level of human capital reporting was low.
Highlights
The study of intellectual capital as a discipline has experienced rapid growth during the last two decades
There were no disputes or personal grievances which triggered the “employment relationship problems” provisions of the Taranaki Regional Council Collective Employment Agreement during the period (Taranaki Regional Council, 2005 annual report, 71). This preliminary research into intellectual capital reporting by local authorities indicates that overall intellectual capital disclosure in the annual report is varied
Despite the New Zealand local government sector employee/staff expenses comprising a considerable portion of total expenditure, human capital reporting in the annual reports is low
Summary
The study of intellectual capital as a discipline has experienced rapid growth during the last two decades. The intellectual capital movement emerged in the late 1980s when a relatively small group of forward-thinking practitioners begun to seek alternatives to traditional accounting practice. They sought methods that adequately accounted for the value drivers of the ‘new’ economy. This new economy is the ‘information age’ and a key value driver is knowledge (Bontis, Dragonetti, Jacobsen & Roos, 1999; Petty & Guthrie, 2000). By accounting for intellectual capital, organisations seek to capture the value of knowledge and harness its value-creating potential
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