Ownership composition and intellectual capital disclosure: Indonesia as a case study

Yana Ulfah,Yanzil Azizil Yudaruddin,Rizky Yudaruddin

doi:10.21511/imfi.18(2).2021.04

Yana Ulfah, Yanzil Azizil Yudaruddin + Show 1 more

Open Access

https://doi.org/10.21511/imfi.18(2).2021.04

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Abstract

This study explores whether ownership structure (comprising ownership concentration, foreign, managerial, and institutional ownership) affects intellectual capital disclosure (ICD) in Southeast Asia’s largest stock market and Indonesia’s emerging economy. The sample includes 323 public firms listed on the Indonesia Stock Exchange (IDX) from seven industries between 2008 and 2017, or 2,634 firm-year observations. Data were analyzed using the ordinary least squares (OLS) regression with robust standard errors. The results show that ICD is positively related to ownership concentration. A negative and substantial relationship was found for both foreign and managerial ownerships, while the institutional ownership variable had a negative and insignificant impact. Overall, the results show robust conclusions regarding the impact of the ownership structure on ICD. The findings of this investigation could be taken into account by capital market authorities such as the Indonesia Stock Exchange (IDX) to raise awareness of intellectual capital and improve ICD practices. Acknowledgment The researchers are grateful for the valuable responses from two unnamed reviewers and discussion respondents at Mulawarman University. We also thank the Indonesia Stock Exchanges (IDX) and The Indonesia Capital Market Institute for providing the annual report.

Highlights

The shift from physical capital to a knowledge economy has brought about significant changes in the nature, structure, and operations of companies
This study explores whether ownership structure affects intellectual capital disclosure (ICD) in Southeast Asia’s largest stock market and Indonesia’s emerging economy
ICD = Intellectual Capital Disclosure, CON = Share ownership held by one person or more 5%, MEN = Percentage of shares owned by the managers, FORG = Percentage of shares owned by the foreign investors, institutional ownership (INST) = Percentage of shares owned by institutional investors, SIZE = The natural logarithm of total assets, LEV = The ratio of total debt to total equity, ROA = The ratio of net profit to total assets, AGE = The age of a firm from the date of establishment, and meeting activity (MEET) = Total number of board meetings held per year

Summary

INTRODUCTION

The shift from physical capital to a knowledge economy has brought about significant changes in the nature, structure, and operations of companies. There was earlier research discovering manageri- and supervisory capability concerning corporate al ownership negatively affected the level of vol- management costs that contribute to governance untary disclosure The ICD theoretical outline foreign shareholding positively and significant- indicates ownership composition affects whethly influenced voluntary disclosure. Al Akra et al er intellectual capital is disclosed In light of this (2010) found a positive relationship between discussion, the relationship between ownership foreign investors and voluntary disclosure in list- structures and ICD was explored. (2013), focusing on the extent of corporate social responsibility (CSR) disclosures in Bangladesh, H1: Ownership concentration positively influencfound that foreign ownership significantly influes intellectual capital disclosure.

METHODOLOGY

AND DISCUSSION

CONCLUSION AND RECOMMENDATIONS

Findings

Disclosure Regulation