Intellectual Capital Disclosure Practices Research Articles

INTELLECTUAL CAPITAL DISCLOSURE: STUDI KOMPARASI ANTARA UNIVERSITAS DI INDONESIA DAN MALAYSIA

The aim of this study is to identify the intellectual capital disclosure practices of Indonesia and Malaysian universities. 5 best universities from Indonesia and Malaysia based on webometrics 2015 survey was used as the object of study. Intellectual capital component used in this study is a framework developed by Ulum (2011) which consist of 46 items: 8 items human capital, 23 items structural capital, and 15 items relational capital. Mann-Whitney test with SPSS 21 was used to analyze the data. The results showed that there were no differences between universities in Indonesia and Malaysia in disclosing information about the IC through their website. Based on the amount of information disclosed, both universities in Indonesia and Malaysia were more likely to disclose information in a narrative format. DOI: 10.15408/akt.v9i1.3582

Pengaruh Corporate Governance Terhadap Praktik Pengungkapan Modal Intelektual Di Indonesia

The purpose of this study was to examine empirically the influence of corporate governance to intellectual capital disclosure (ICD) practice of Indonesian public companies. ICD was measured with the framework that constructed based on Bapepam-LK regulation, whereasthe corporate governance measured by its structures i.e. audit committee, board of commissioner, and board of director. This study used purposive sampling method to determine the sample from public companies which are included in the 50 biggest market capitalizations from 2007 until 2014. The linier regression method was used to analysis the data. The result shows that corporate governance has an effect on the intellectual capital disclosure practices in Indonesia. It means that, the structures of corporate governance of companies determine the amount of intellectual capital information disclosed on their annual report.

Analysis of Intellectual Capital Disclosure Practices of the Annual Reports of Listed Companies in Sri Lanka

Capital components in the Intellectual Capital (IC) namely Human Capital (HC), Organizational Capital (OC) and Social Capital (SC) have impact on enhancing the organizational wealth. The different practices of disclosing the IC in annual reports do not result the real outcome of financial position of the firm, is a key problem in Sri Lankan business organizations. Therefore, this study examines the existing IC disclosure practices of listed companies in Colombo Stock Exchange (CSE).The study has been done based on the secondary data covering the annual reports of listed companies in Sri Lanka. More than 20% companies have been selected from each industry and annual reports of last 3 years have been taken as the sample from each company. Main findings were that 25%of companies have mentioned about HC disclosures; 13% of companies have mentioned about OC disclosures and15% of companies have mentioned about SC disclosures in their annual reports under different sections. With the proper design, development and implementation of the best practices, it should be possible to enhance the disclosure of IC to the required levels in the annual reports.

A Study of the Evolution and Contemporary Development of Disclosure Practices of Annual Reports in Sri Lanka

The evolution and contemporary development of usage of annual reports in Sri Lanka acts a critical role in the disclosure practices of the financial performances of the companies in Sri Lanka. From the British era of the Sri Lankan culture, there was a clear evolution of the disclosure practices of Sri Lanka. This refers the evolution of disclosure practices in the annual reports of Sri Lanka by giving a major focus to the intellectual capital (IC) disclosure practices. It means human capital information, customer capital information and social capital information. The period has been divided in to four categories as before 1948, between 1948 to 1977, between 1977 to 2009 and modern period after 2009. Throughout these four eras the disclosure practices have been developing and in modern days and the disclosure practices of Sri Lankan annual reports show the real picture of the companies performances rather than past eras since the fast growing of disclosure practices in last two decades.

Validation of Financial Credibility in the Questionnaire in the Field of Intellectual Capital Disclosure Practices of the Public Listed Companies in Sri Lanka

Validation of Financial Credibility in the Questionnaire in the Field of Intellectual Capital Disclosure Practices of the Public Listed Companies in Sri Lanka Sanjaya D. Jayasooriya, Kennedy D. Gunawardana Abstract Intellectual Capital is one of the key areas which is a part the intangible assets of the companies. According to the main objective of this study, it is wanted to find out the existing intellectual capital practices in public limited in Sri Lanka and study how they affect the financial credibility of the company. Without recording the intellectual capital figures in the balance sheet, it shows that the financial credibility of the balance sheet has been understated. Therefore,a questionnaire was developed to get the opinions from the accountants specially covering all the sectors of public limited companies and only 35 questionnaires were distributed. The dimensions and the variables were identified through a rigorous literature survey and based on that the conceptualization and operationalization have been done. To check the reliability, internal reliability, spilt half reliability and test retest reliability have been tested. To check the validity, face validity, content validity, construct validity (with factor analysis), convergent validity and discriminant validity have been tested. The dependent variable (Financial Credibility) has been taken as the main constructto test the reliability and validity. Finally, it is clear that the reliability and the validity have been ensured of the questionnaire. Full Text: PDF DOI: 10.15640/rah.v4n2a10

Capital market pressures and the format of intellectual capital disclosure in intellectual capital intensive firms

Purpose– A number of studies have examined firms’ intellectual capital (IC) disclosure practices. However, the presentation format of IC disclosure (text, numerical and graphs/pictures) is yet to be examined. In addition, there is little evidence on the impact of capital market pressures on IC disclosure. The purpose of this paper is to examine the relation between presentation format of IC disclosures and three market factors (market-to-book ratio, share price volatility and multiple listing (ML)).Design/methodology/approach– Using content analysis, the authors examine the level of IC disclosure provided in the annual reports of 100 IC-intensive listed UK firms. A 61-IC-item research instrument is used to measure IC disclosure and regression analysis is employed to examine the relation between disclosure and the market factors, controlling for corporate governance and firm-specific variables.Findings– Text is the most commonly used format for IC disclosure, whilst the use of graphs/pictures is very low. The findings of the relation between market factors and IC disclosure are mixed. Market-to-book ratio is significantly related to disclosure in text and numerical, but not to graphs/pictures. Share price volatility is only associated with graphs/pictures, whilst ML is only related to text.Originality/value– The authors findings suggest that the impact of capital market pressures on IC disclosure might differ with presentation format. In this context, the study makes a significant contribution to the IC disclosure literature.

The relationship between recognised intangible assets and voluntary intellectual capital disclosure

Purpose – The capitalisation of intangible investments is discussed controversially in the financial accounting literature. International accounting standards are concerned with this issue and generally demand more intellectual capital to be recognised on the face of the balance sheet. If investors and analysts already gather monetary information about intangible assets from the financial report and find such information useful, then the necessity to complement such information with voluntary intellectual capital disclosure will diminish. Accordingly, there should be an association between recognised intangible assets and voluntary intellectual capital disclosure. The paper aims to discuss these issues. Design/methodology/approach – The authors analyse the voluntary disclosure of 264 investor conference and roadshow presentations of German DAX 30 firms in the year 2001, 2003, 2005, and 2007. The authors apply regression models to analyse the association between recognition of intangible assets and voluntary intellectual capital disclosure and control for other determinants of voluntary disclosure. Findings – The authors find that the magnitude of recognised intangible assets is significantly and negatively associated with the quantity and quality of voluntary intellectual capital disclosure. The authors show that this association is mainly driven by goodwill accounting. In more detailed analyses we find different directions (positive, negative and insignificant) of this relationship for different categories of intellectual capital. Research limitations/implications – Future studies on voluntary intellectual capital disclosure need to consider recognised intangible assets as a determinant to avoid omitted variable problems. Practical implications – The authors provide descriptive evidence about voluntary intellectual capital disclosure practice of Germany’s largest firms. Originality/value – The paper provides primary evidence on the association between recognised intangible assets and voluntary intellectual capital disclosure.

Corporate reporting of intellectual capital: evidence from the Bangladeshi pharmaceutical sector

Purpose– The purpose of this paper is to provide an understanding of the intellectual capital (IC) reporting practices of the Bangladeshi pharmaceutical industry, one of the most significant industries to the Bangladeshi economy. It investigates the extent and qualitative characteristics of IC disclosures made by listed pharmaceutical companies in Bangladesh.Design/methodology/approach– Data are gathered through a content analysis of the 2006 annual reports of 16 pharmaceutical companies quoted on the Dhaka Stock Exchange. The content analysis is performed by IC topic (i.e. categories and subcategories) and three semantic properties of IC disclosure: first, format (i.e. discursive, numerical but non-monetary, numerical-monetary and visual); second, news-tenor (i.e. positive, neutral and negative); and three, time-orientation (i.e. forward-looking, non-time-specific and past-oriented).Findings– Results suggest a clear awareness among the Bangladeshi pharmaceutical companies of the significance of IC in corporate value creation and a commitment to publicly communicating IC. Some evidence is found of the need to manage stakeholder relationships, and legitimacy and impression management motives underpinning the management's desire to disclose IC. Also, proprietary cost theory explains the variation in the disclosure of types of IC. The Bangladeshi pharmaceutical companies did not adopt a consistent framework for IC reporting. A lack of consistency in reporting IC was also evident as the extent and subcategories of IC disclosures varied among companies. The findings indicate the Bangladeshi pharmaceutical companies may not have properly measured and managed their IC.Research limitations/implications– There are two main limitations specific to this study. First, it only provides a snapshot of IC disclosure practices of Bangladeshi pharmaceutical companies in 2006. Changes may have taken place since then that would have affected the IC-intensity and IC utilisation of these entities. Second, the study's sample is limited due to its focus on one industry. However, it is representative of the population as it includes more than two-thirds of Bangladeshi pharmaceutical companies. This limitation affects the ability to conduct statistically meaningful analyses for testing any hypotheses relating to IC disclosure.Originality/value– This is the first study on IC reporting practices of Bangladeshi pharmaceutical companies. Unlike most prior studies on IC disclosure practices, this study measures the quality of disclosures by analysing their semantic properties. The paper highlights the need for building organisational competencies in managing, measuring and reporting IC in Bangladesh.

Intellectual Capital Disclosure Emphasis: An Analysis of Malaysian Annual Reports

Intellectual capital disclosure within the annual report has increased in frequency and types over the last few years. Despite this growth, relatively little is known about the incentives or motivations behind such reporting practices. Further, their unregulated nature means that management has great discretion when reporting. This paper adds to research in this topical area. This study aims to examine the presentation of annual reports with respect to intellectual capital disclosure particularly when firms are driven by capital-raising motive. We focus on the top 100 Malaysian firms in 2010. Data from annual reports is hand-collected to determine the intellectual capital disclosure practice. The findings, which support signalling theory, provide evidence that capital-raisers report more intellectual capital compared to their non-capital-raiser counterparts. These capital-raiser firms emphasise intellectual capital information by positioning information in the headline, in special character and fonts and through repetition. This is consistent with the motivation to provide intellectual capital information that investors will not only recognise but that they will also retain and recall when making investment decisions.

The impact of corporate governance attributes on intellectual capital disclosure: A longitudinal investigation of Nigerian banking sector

The main objective of this study is to examine the role of corporate governance and ownership structure attributes in intellectual capital (IC) disclosure practices of Nigerian banking sector, following the recent restructuring and regulatory changes in the banking sector. A longitudinal investigation over a 4-year period (2006–2009), a period following the regulatory changes, has been undertaken. Using a disclosure checklist to measure the overall and the subcategories of IC disclosures of the banks, a total of 80 annual reports were subjected to content analyses. Corporate governance attributes comprise board size, independent non-executive directors and board meetings, whereas ownership structure patterns include director and government ownership. The results revealed that all the corporate governance and ownership structure patterns, except board size, have a significant positive association with the overall amount of IC disclosures. The results also showed that the governance and ownership structure variables had significant impact on at least one of the IC disclosure components of internal, external and human capital. Size, as a control variable, has further shown a strong positive association with the IC disclosures. This article, which examines the relationship between IC disclosures and corporate governance attributes, following the introduction of a mandatory code on corporate governance for the banks, implies that corporate governance mechanisms play a key role in dissemination of IC information. The article also provides an empirical support to previous cross-sectional studies that documented a similar strong positive association between governance attributes and IC disclosures in several other countries.

Intellectual Capital Disclosure by the Listed Fuel & Power and Engineering Firms in Bangladesh

The main objective of this study is to measure the level of intellectual capital (IC) disclosure practices by listed fuel & power and engineering companies in Bangladesh. Like physical assets, IC assets are also important for any organization. IC ensures the utilization of physical assets effectively and efficiently. Intellectual capital includes structural capital, relationship capital, and human capital. Having quality IC is the prerequisite for the smooth operation of an organization. But these important assets are not reported in the financial statement sufficiently or this information is not communicated to the stakeholders properly. The entity can enjoy competitive advantages in disseminating information regarding IC and stakeholders may make pragmatic decisions on the basis of this information as well. The profitability, potentiality, and sustainability of the organization may also depend on the quality of IC. The content analysis method is used in this study. An unweighted disclosure index, with 37 IC items, has been developed. The sample covers 80% of firms in the fuel & power and engineering industries. As a source of data, the corporate annual reports of the companies for the year 2007-2008 or 2008 were used in this study. Out of required items, average disclosure scores of human capital, structural capital and relationship capital are 37.94%, 64.81%, and 60.19% respectively. So, the average disclosure score of the sample complaints is 49.89%. The regression results show that the proportion of independent directors, the proportion of audit committee members, and market capitalization are influencing factors to disclose IC items in the annual reports.

Intellectual capital disclosures by Indian and Australian information technology companies

PurposeThe purpose of this paper is to investigate and compare the voluntary reporting of intellectual capital (IC) by the top 20 software and technology sector companies in a developing nation, India, and a developed nation, Australia. The paper aims to highlight the differences in IC disclosure practices of the companies operating in two different economies.Design/methodology/approachThe study investigates the top 20 firms by market capitalisation listed on the Bombay Stock Exchange in India and the Australian Stock Exchange in Australia in the year 2007‐2008. Using the content analysis method, the paper reviews the annual reports of these firms to determine IC disclosure trends in India and Australia. Statistical tools and graphs have been used to compare and contrast ICD disclosures in two countries.FindingsThe study has identified IC disclosure differences between Indian and Australian firms, and reports disclosures by Indian companies are on a higher scale than Australian Software and Technology Sector companies. However, Levels of voluntary IC disclosure are found to be low in both the nations and most of the disclosures are declarative in nature.Research limitations/implicationsThis lack of consistency in reporting practices makes comparisons across countries difficult. The paper emphasises the need for a uniform and consistent framework for the reporting of intellectual capital items.Practical implicationsThe results of this exploratory study on the knowledge based industrial sector can be used by researchers to explore different types of IC reporting initiatives pursued across specifically knowledge based industrial sectors.Originality/valueThis study offers insights into comparative trends in IC disclosure practices of software and technology sector companies operating in a developed and a developing country.

The trends of intellectual capital disclosures: evidence from the Nigerian banking sector

PurposeThis paper longitudinally examines the intellectual capital (IC) disclosure practices of Nigerian banks following the restructuring exercise and the subsequent policy changes in the Banking sector.Design/methodology/approachContent analysis of annual reports of the banks was carried out over a period of four years (2006‐2009), a period following the consolidation exercise and the subsequent introduction of the mandatory code of corporate governance. A self‐constructed IC disclosure checklist was used to measure the extent of IC information disclosed in the annual reports. A number of statistical techniques were performed to assess the trend of IC disclosures and compare the IC disclosure categories.FindingsThe results show that the overall IC disclosures of the Nigerian banks increased moderately over the four year period. Human and internal capital disclosures dominated the banks' IC disclosures, with only internal capital disclosures showing a significant increasing trend over time.Research limitations/implicationsThe increasing trend of IC disclosures of the banks suggests that the introduction of the mandatory code of corporate governance had positive implications on IC reporting practices. Hence, the findings of this study give support to previous research that established a strong positive association between IC disclosures and corporate governance development. However, this study only examines the IC disclosures of Nigerian banks following the reformation of the banking sector. Future research should incorporate other countries experiencing similar regulatory changes.Practical implicationsThe introduction of the corporate governance code might have positively influenced the IC disclosure practices of the banks. However, the results had shown that the IC disclosures were mainly inconsistent and discursive in nature. Hence, the regulatory authorities, accounting setters and other relevant government agencies may wish to devise a detailed IC reporting framework for the banking sector.Originality/valueDespite the significance of the banking sector to any economy, the IC disclosure practices of the banks largely remained unexplored. This study provides a much needed longitudinal assessment of the IC disclosures in the case of Nigerian banks following a major consolidation exercise and the introduction of a mandatory code of corporate governance specifically designed for the banks. The study also represents the first empirical investigation of IC reporting practices in Nigeria.

Civil war, stock return, and intellectual capital disclosure in Sri Lanka

This study examines the effect of current-period intellectual capital disclosure on earnings and current annual stock return during a civil-war period. Using the top 30 firms by market capitalization listed on Colombo Stock Exchange over six years (from 1998 to 2003), this study finds that firms do not include the current-period intellectual capital disclosure in the current stock return, and the increase in the current-period intellectual capital disclosure activity has no influence on earnings included in the current stock return. Future accounting-based earnings, if stated in the current period, by contrast are included in the current stock return. The findings provide insights into the intellectual capital disclosure practice and its influence on stock return in a civil-war environment.

Analisis praktik pengungkapan informasi intellectual capital dalam laporan tahunan perusahaan telekomunikasi di Indonesia

The aim of this study is to describe the intellectual capital disclosure practices by Indonesian telecommunication industry. Content analysis was used to analyze the annual report for two years, 2007 and 2008. This research used Guthrie and Petty’s scheme of intellectual capital components. In this scheme, IC was categorized to 3 groups; internal structures (organizational capital: 11th items); external structures (customer/relational capital: 9th items); and employee competence (human capital: 8th items). The result shows that percentage of IC disclosure by Indonesian telecommunication industry was high relatively, compare with the other overseas results. In 2007, there was some at- tributes that not disclosed yet by company, it was ’patent’, ’copyright’, dan ’trademark’. But in 2008, all of IC attributes were disclosed by companies, even not of all companies. There was no company that discloses all of 28th component of IC at their annual report. The maximum number of attribute that disclosed by company was 24. Keywords: intellectual capital disclosure, telecommunication industry, content analysis

Intellectual capital disclosure trends: Singapore and Sri Lanka

PurposeThe purpose of this paper is to investigate the intellectual capital (IC) disclosure trends and disclosure category differences of top 20 listed firms in a developing nation, Sri Lanka, and moderately developed nation, Singapore. The paper aims to highlight the differences in IC disclosure practice between developing and developed nations.Design/methodology/approachThe study investigates the top 20 firms by market capitalization listed on the Colombo stock exchange in 1998‐2000. Using the content analysis method, it reviews the annual reports of these firms to determine IC disclosure trends in Sri Lanka. It then compares these findings with a similar unpublished study undertaken in Singapore during the same period.FindingsThe study identified IC disclosure differences between Sri Lankan and Singapore firms, and suggest reasons for differences from country perspectives. The paper highlights the need for a uniform methodology in intellectual disclosure framework to establish consistent disclosure practices.Practical implicationsThis study highlights the need to establish a uniform methodology for financial disclosure under International Financial Reporting Standards that can mobilize globally uniform disclosure IC disclosure practices.Originality/valueThis study offers insights into comparative trends in IC disclosure practices between a moderately developed and a developing country.

Intellectual capital disclosure (ICD)

PurposeTo explore the hypothesis that differences in intellectual capital disclosure (ICD) practices can be explained, if in part, by industrial sector (traditional; knowledge intensive) and nationality of origin (Italy; UK).Design/methodology/approachContent analysis of the annual reports of two reasonably matched samples of both high‐technology and traditional non‐financial firms in Italy and the UK. Univariate and multivariate analyses are then used to test the hypothesis proposed.FindingsSize and industrial sector are found to be predictors of levels of ICD; the hypothesis relating nationality of origin to ICD is not supported.Research limitations/implicationsThe main limitation relates to sample size due to the onerous nature of this form of research. Further research following this matched‐sample methodology should attempt to maximise sample sizes allowing for the incorporation of more specific nationally of origin factors.Practical implicationsOwing to the increasing importance of intangibles and intellectual capital, how these are reported is of interest to a large range of stakeholders. There is, as yet, no universally accepted form, or indeed regulation, of ICD.Originality/valueThe matched‐sample methodology on international ICD comparison expands on extant approaches.

Firm ownership structure and intellectual capital disclosures

The primary purpose of this study is to investigate the association between three ownership structure characteristics and voluntary intellectual capital (IC) disclosure practices. Data for this study is hand collected from the 2000 annual reports of 390 Singapore publicly traded firms. Empirical results indicate Singapore publicly listed firms more closely owned were less likely to voluntarily disclose IC related information than counterparts with a more diffused ownership base. Also, those firms with a high level of executive director ownership were less inclined to voluntarily disclose IC related information than those where executive directors had smaller holdings in the entity. Finally, findings indicate government linked corporations (GLCs) will likely make more voluntary IC disclosures than non-GLCs. Overall, this study makes several unique contributions to the literature. First, the present study provides the first large-scale analysis of evidence of the association between ownership structure and voluntary intellectual capital disclosures. The study also contributes by broadening the examination of intellectual capital disclosure practices beyond general descriptive overviews.

Disclosing intellectual capital in company annual reports: Evidence from Malaysia

Companies around the world are recognizing the importance of intellectual capital (IC) and its significant contribution towards adding higher value to its products or services. The objective of the study is to examine the IC disclosure practices of the top 20 profit‐making public listed companies in Malaysia in their annual reports, both qualitatively and quantitatively. This paper adopts the definition of Karl Erik Sveiby which classified IC as internal capital, external capital and employee competence. A content analysis of 20 copies of 2001 annual reports was carried out. The study indicates that the incidences of voluntary disclosure of IC in company report are high qualitatively, but not quantitatively. This study will assist future researchers, the national accounting setting board and regulators to develop an appropriate accounting framework for those ICs which do not have accounting standards yet.

Is intellectual capital performance and disclosure practices related?

Breaks with the prior literature on intellectual capital disclosure practices in two major ways. First, provides a longitudinal examination of intellectual capital disclosure practices in the annual reports of 31 FTSE 100 listed companies from 1996‐2000. Second, investigates the relationship between intellectual capital performance and the extent of intellectual capital disclosure. Between 1996 and 2000 the quantity of intellectual capital disclosure increased. Empirical findings did not indicate a systematic relationship between intellectual capital performance and the quantity of disclosure during the survey period. Results, however, suggest that if intellectual capital performance is too high the amount of disclosure is reduced. This negative association may support the suggestion that firms reduce intellectual capital disclosures when performance reaches a threshold level for fear of competitive advantage being lost. Leverage, industry exposure and listing status was also found to have an influence on the quantity of disclosure.