Intellectual Capital Reporting Research Articles

The Intangible Global Report: an integrated corporate communication framework

PurposeIntangibles are the main value drivers of a firm. This consideration implies that it becomes more and more important/urgent to measure and report intellectual capital. The new reporting statement (intellectual capital report) is not yet commonly used by firms, but many, on a voluntary basis, already publish environmental, social and sustainability reports, which contain much information on intangibles. Starting from this point, the purpose of this paper is to demonstrate that it is possible to integrate the information contained in both reports in a singlead hocintegrated document, having both external and internal communication aims.Design/methodology/approachThe paper addresses three research questions: whether the theoretical premises exist for the integration of the two different frameworks; which frameworks should be chosen as a starting point; and which features should have an integrated framework. Theoretical premises for integration have been found in the research‐based view (RBV) theory. To chose the social report and intellectual capital report (ICR) framework to use as starting points, the authors analyze the frameworks from the intellectual capital (IC) and corporate social responsibility (CSR) literature; then choose the frameworks (GRI3 and Meritum reports) founded on an evolved notion of, respectively, corporate responsibility and IC, which share the same features – the orientation towards stakeholders, the managerial approach, and the focus on intangible activities that a new integrated framework should respect.FindingsStarting from the selected CSR and ICR frameworks, the authors planned and designed a new, ad hocmodel of corporate communication, able to integrate the social and intangible dimensions in a single document, named the Intangible Global Report (IGR). The IGR framework is composed of five dimensions, three derived from the ICR (human capital, structural capital, relational capital) and two from the GRI report (environmental, social). The different aspects of each dimension are surveyed in terms of intangible resources, activities and impacts, measured by financial and non‐financial indicators.Originality/valueThe main originality of the paper consists in providing a general framework for firms to integrate all their intangible information in a single document – the IGR framework – focused on the firm's strategy, which allows the stakeholder to visualize all the firm's intangibles, how a company conducts its activities and the impacts that such activities have on the environmental, social and IC dimensions.

Intellectual Capital Reporting in Malaysian Technology Industry

In recent decades, Malaysia has witnessed tremendous economic and social changes. As a result, the business environment is also becoming more complex and demanding. One of the areas that captured the attention of the accounting profession was intellectual capital reporting. Previous studies revealed that intellectual capital reporting has a major impact on investor’s confidence. Due to the importance of intellectual capital, its disclosure is significant. The purpose of this paper is to investigate the intellectual capital reporting practices of Malaysian listed companies in the technology industry. This study also assesses the association of firm’s characteristics and intellectual capital disclosure. Using the content analysis method, it reviews the annual reports of all the technology companies listed on the Main Market and Ace Market of Bursa Malaysia in year 2009. The study reveals that the technology industry discloses most on external capital compared to human capital and internal capital. There is not much difference in terms of intellectual capital disclosure between the Main Market and the Ace Market. However, for the technology industry the firm’s characteristics does not have any association with the extent of intellectual capital reporting. Since the study focuses on one industry, the results of this study may assist the companies to be more aware of other aspects of corporate reporting particularly concerning intellectual capital disclosure. In addition, it may benefit the regulators and standard setting bodies for future regulatory impact especially in establishing an intellectual capital reporting framework for Malaysian companies.

The impact of human resource disclosure on corporate image

PurposeThe purpose of this paper is to investigate the effects of human resource disclosure on corporate image.Design/methodology/approachThe information about human resources presented in their annual reports by 105 Spanish listed companies was grouped in three categories, previously defined in literature. We distinguish information about human capital (items usually included as human capital in Intellectual Capital reports), social information about employees and information about ethics questions relative to employees. A content analysis of these 105 annual reports was conducted to measure human resource disclosure and a regression analysis was carried out to study the impact of this information on company image.FindingsThe findings reflect the significant effect of the three categories of human resource disclosure on corporate image.Practical implicationsThis study might encourage firms to improve their disclosure policy on issues related to human capital, such as training, and on social and ethical aspects of employees, such as health and safety at work and working rights.Originality/valueThis paper contributes to research on human resources by confirming the impact not only of information about human capital, which is mainly oriented to shareholders, but of social and ethical information about employees, oriented as well as to stakeholders, on corporate reputation.

Intellectual capital reporting in a South Asian country: evidence from Bangladesh

PurposeThe purpose of this paper is to examine the intellectual capital reporting (ICR) practices of listed non‐financial companies in Bangladesh as an example of a South Asian developing country, and to empirically investigate some company characteristics as determinants of such practices.Design/methodology/approachThis is an empirical study of ICR by 90 listed companies in Bangladesh in 2008‐2009 using content analysis of annual reports. The study uses a weighted disclosure index and ordinary least squares regression analyses to test the association between company characteristics and the extent of ICR.FindingsThe study finds that despite the stock market growing significantly during the recession period, there is a tendency of companies not to disclose IC. The study also confirms that size and industry are important attributes to explain the IC disclosure (ICD) issues in Bangladesh. Unlike prior studies, the study finds that the IT sector does not tend to disclose more extensively, and that companies currently fail to disclose many important items such as patents, trademark and copyrights. The result is an indication that companies in Bangladesh are reluctant to disclose IC. The study is also similar to Abeysekera and Guthrie, who found that Sri Lanka is a proactive rather reactive country in terms of ICR. The study also finds ICR depends on the self‐interests of the company.Research limitations/implicationsThe scope of this study is limited to single year, 2008‐2009. It would be interesting to replicate this study in other developing countries or a group of developing countries in South Asia that have many similarities to the Bangladesh socio‐economic environment. Nevertheless, the study incorporates the current level of ICR transparency in Bangladesh.Originality/valueUnlike previous studies, the present study is based on a developing country where the capital market is growing significantly during the recession years. The study also develops a weighted disclosure index in a developing country context, based on the extensive literature of ICD and some new characteristics, namely non‐family ownership, audit committee and liquidity risk.

Does including pictorial disclosure of intellectual capital resources make a difference?

PurposeThis paper seeks to examine the extent to which pictures are used to communicate intellectual capital (IC) information and the changes in volume of IC disclosure when pictures are included.Design/methodology/approachA content analysis was conducted to determine the impact that pictures have on IC reporting (ICR) results. In determining the extent to which pictures are used in corporate annual reports the paper compares frequencies of IC reported in pictures as proportions of: total IC reported, total pictures and total pages. A key assumption underlying content analysis is that the volume of disclosure signifies the importance of the item(s) being disclosed. The paper compares the volume of IC items disclosed with and without pictures to determine which items firms signal as being most important. Using these volumes the paper determines which of the sampled firms use pictures as a popular reporting mechanism to disclose their IC resources.FindingsA significant portion (42 per cent) of ICR is made in picture form and the majority of pictures (66 per cent) communicate messages about IC resources. Therefore, the volumes of IC items disclosed change significantly when pictures are included. It is found that many firms use pictures to disclose their IC resources, particularly employees and brands which may indicate that these are their most important IC items.Practical/implicationsA significant part of IC is reported in picture form in annual reports. Excluding pictures when analysing content in annual reports will result in ICR not being fully captured, a partial understanding of what IC is disclosed and misunderstanding of what IC items firms consider as being important.Originality/valueThe authors incorporate pictures into their content analysis. Pictures are not normally included in IC disclosure studies.

The application of intellectual capital reports in local authorities: analysis and empirical evidence

This paper aims to investigate intellectual capital management in a public organisation as the Chambers of Commerce; in particular, whether and to what extent intellectual capital contributes to overall accountability and what role intellectual capital plays as a management tool. In order to answer these questions, the paper examines a case study, the Chamber of Commerce of Verbania Cusio Ossola that, at present, is one of the few in Italy, which prepares an intellectual capital report, by dedicating to it a special section in its social budget, where IC is reported. The paper also describes the intellectual capital report used in the Chamber of Commerce, the information supplied and the role of intellectual capital management in this context explaining the value added it brings to the community.

Intellectual capital reporting at UK universities

PurposeThe purpose of this study is to examine the amount and the nature of the voluntary intellectual capital (IC) disclosure of UK universities, the relation between performance and amount of IC disclosed; and the opinion of UK universities on a mandatory disclosure of IC.Design/methodology/approachContent analysis was used to examine the amount and nature of IC disclosure of the annual reports of 30 UK universities. Directors of Finance were chosen as representatives to submit an online questionnaire about IC statements and the mandatory reporting of IC for universities.FindingsFindings suggest that the amount of IC information disclosed by UK universities in their annual reports is low. UK universities were identified as being over‐regulated and having low awareness of IC.Research limitations/implicationsIC framework used for the content analysis was specific to Austrian universities and the online questionnaire responses were limited. Few adaptations were made but it is necessary to perform a preliminary study to better understand the characteristics and functioning of UK universities.Practical implicationsFurther research and recommendations are provided. Introduction of mandatory disclosure of IC reports would contribute further to the increase of the burden. Therefore at the present time voluntary IC disclosure is the best option.Originality/valueNo previous research was conducted for UK universities. This brings new expertise regarding IC disclosure in higher education and forms a sound basis for future research. Universities could benefit in improving assessment of their intangible assets, performance measurements, allocation of resources and benchmarking exercise.

Intellectual capital reporting in knowledge economy of Egypt

This study examines voluntary intellectual capital reporting (ICR) in annual reports of the top 30 companieslisted in Cairo and Alexandria Stock Exchange1 (CASE) as well as eliciting the barriers that could hamper the development and implementation of ICR in an Egyptian setting. The study contributes to the body of research done in this area, as most of research has been conducted in developed countries. There is a lack of empirical research at organisational level in the field of intellectual capital in Egypt, which is, socially, economically and culturally different from developed countries. The results indicate that levels of voluntary disclosure of IC items are relatively low while disclosures are dominated by customer relations items. Additionally, reporting of IC is in qualitative rather than quantitative style. The most important barriers that might impact the development and implementation of IC are cost and time associated with developing IC indicators.

Intellectual Capital Reporting and Corporate Characteristics of Public‐Listed Companies in Malaysia

This study examines the extent and nature of voluntary intellectual capital (IC) disclosure by public‐listed companies in Malaysia and how the disclosure may be explained by the economics or other rationale of corporate disclosure. Those intangible assets that are required to be disclosed under the extant accounting standards were specifically excluded from this study. The top 30 and the bottom 30 companies were selected from the list of top 100 largest public‐listed companies by market capitalization at the end of 2003. Content analysis was used to measure the extent of voluntary IC disclosure in the 2003 annual reports of the selected companies. This study found that the voluntary disclosure of IC information is generally not extensive among the publiclisted companies in Malaysia and narrative description of their IC attributes is the most often adopted format. The findings suggest that the IC disclosure behaviour of the sample companies may be explained based on both economic and non‐economic rationale. Implications of the findings are discussed.

IC reporting in the Australian Red Cross blood service

Purpose – The paper aims to study and compare the Australian Red Cross Blood Service (ARCBS) annual (AR) and intellectual capital reports (ICR) with an earlier study. The paper seeks to analyse the reporting practices of intellectual capital (IC) within this organisation.Design/methodology/approach – The case study organisation is an Australian not‐for‐profit (NFP) organisation and the study took place over three years. A content analysis of ARCBS AR and ICR between 2002 and 2005 was conducted. Several interviews were conducted with a number of key ARBCS staff during 2006 to identify why and how they reported IC information.Findings – The findings indicate a greater focus on internal and external capital with less focus on human capital. The frequency with which certain internal, external and human capital elements occur in ARCBS reports can be explained by macro, meso and micro factors which affect the organisation and influence the information it provides to its stakeholders. It was found that the AR ad...

Does intellectual capital reporting matter to financial analysts?

Purpose – Small and medium‐sized companies (SMEs) have started to generate intellectual capital (IC) reports in order to enhance their management and corporate reporting. While the impact of a better management is quite clear, it is still unclear if an IC report has any impact on the rating of a company. The aim of this paper is to determine whether intellectual capital reports of SMEs generate any impact on the valuation behavior of analysts.Design/methodology/approach – A test design was developed which comprised a literature review, a brain trust with financial experts, a quantitative survey, and an experiment with analysts based on two case studies.Findings – If some requirements about structure and content of an IC report are fulfilled, it contributes to a more homogeneous rating than a rating based solely on information from financial reporting. Therefore, intellectual capital reports reduce risks for both investors/banks and SMEs.Research limitations/implications – The research is based solely on G...

INTELLECTUAL CAPITAL AUDIT: CONCEPTION, GOALS AND REAL POSSIBILITIES

The main objectives of this paper are to research the background of the formation of intellectual capital audit conception, to define its meaning and to assess the possibilities as well as expedience of its application within the intellectual capital theory and the internal and external audit practice of organization. Common points between the targets of the intellectual capital measurement and the traditional internal and external audit are analyzed in this paper. Analysis of scientific literature and methods of analogy and generalization are used in this research. The main findings of research are based on the systematic scientific literature review and the experience of business practice. In the first part of research the background of the formation of intellectual capital audit conception is analyzed, the main theories influencing it are determined, common points between these theories are analyzed and predominant meaning of intellectual capital audit conception is explained. Intellectual capital audit techniques as well as intellectual capital measurement methods with the “audit” concept are analyzed in the second part of this paper. Intellectual capital audit solutions within business practice and the audit of public intellectual capital reports are analyzed here as well. At the end of this paper the internal and external audit alternatives of intellectual capital are analyzed and their development perspectives are projected.

An Updated Review of Literature on Intellectual Capital Reporting

This paper updates previous reviews of intellectual capital reporting by focusing on several important associated issues. It examines various definitions of intellectual capital and intellectual capital reporting, via intellectual capital statements, ratios, and through theoretical frameworks. One important finding of the review was that published research had identified that most intellectual capital reporting has been carried out in developed economies. The paper identifies a number of research areas that appear to be under represented in the literature.

Intellectual Capital Reporting; Approaches to Data Collection and Content Method

Increasingly, researchers in the field of Intellectual capital (IC) need to be able to justify the specific research methods they use in the collection of the empirical data that they examine to support opinions regarding the merit of different approaches to managing and reporting Intellectual Capital. Of the various methods available to researchers seeking to understand Intellectual Capital Reporting (ICR), content analysis has proven a popular choice.The aim of this paper is to review the use of content analysis in understanding ICR and to offer some observations on the practical utility of the method. We further examine several research method issues relating to the use of content analysis that have been discussed in the Social Environmental Accounting (SAE) literature, but not as yet in the Intellectual Capital literature, which we believe are relevant to investigations underway in the field of Intellectual Capital Reporting.This paper reports on several developmental issues that we have confronted when using content analysis to examine the voluntary disclosure of Intellectual Capital items by various organisations in their annual reports. The paper also suggests two theoretical foundations for further investigation into the voluntary disclosure of Intellectual Capital by organisations and suggests why content analysis is well matched to both theories as a tool with which to collect the data to test likely research propositions.

Intellectual Capital Reporting in Schools: A Complexity-Scientific Approach to Educational Management

Intellectual Capital Reporting in Schools: A Complexity-Scientific Approach to Educational Management

Social information within the intellectual capital report

Abstract The objective of our work is to propose the integration of two complementary statements on financial information: the social report and the intellectual capital report. Both are statements of great importance in the current business context. The motive behind our proposal is that, in reviewing the current situation, we observed an overlap in the contents and goals of the two reports. For instance, information of a social nature is dealt with in the different blocks of analysis of intangibles in the intellectual capital report. Furthermore, these disclosures share the direct or indirect goal of improving the company's corporate image, which also reflects the links between the two types of reports. Hence, given the observed similarities and the greater flexibility and scope of the intellectual capital report, we propose incorporating the social report into the intellectual capital report. The benefits of this will be twofold: a reduction in the direct costs of preparing the report, and a simplification of the non-financial information for the different stakeholders.

Intellectual capital reporting: the TICRC as an example

Reports of Intellectual Capital (IC) have been increasing in recent years. However, there are no papers addressing how knowledge-intensive institutions create value, how knowledge-based business models work and how the value creation can be reported. The purpose of this study is to illustrate how the reporting of IC is formatted by an IC research institute in Taiwan. The case study provides a basis for developing and managing organisational strategy, introduces a framework for constructing IC reporting through the Balanced Scorecard (BSC), and traces the development of IC for identifying changes in IC reports over time.

Intellectual capital reporting media in an Australian industry

This study uses content analysis to investigate Intellectual Capital Reporting (ICR) by companies within the Australian Food and Beverage Industry (AFBI). It focuses on the external reporting of a single industry and examines ICR across different reporting media: annual reports and corporate websites. It finds that the extent of reporting on intellectual capital by the sample companies is low and most of the disclosures are declarative in nature. Large discrepancies were found between companies on the format and location of disclosures within the reporting media. This lack of consistency makes comparisons across companies difficult. This finding highlights the need for an established and generally accepted framework for ICR to enable credibility, measurability and comparability. The finding that corporate websites reported less ICR information than the annual reports is inconsistent with previous studies in relation to CSR. It appears that companies within the AFBI may not fully realise the benefits of websites for communicating ICR information.

Intellectual Capital Reporting At The Crossroads

Intellectual capital (IC) is an important value driver in today's organization. Although IC reporting is receiving increasing attention from accountants in recent years, the innovativeness of the concept impedes IC from being fully incorporated in financial accounting reports as yet. At present, disclosure of IC-related information by companies is done on a voluntary basis, as applicable accounting regulations dictate the definition of a balance sheet and the assets to be included therein. Omission of IC-related information may adversely influence the decisions made by shareholders or lead to material misstatements. Only when companies provide IC statements on a large scale, we would be able to speak of a true reporting revolution in company valuation, both in theory and in practice. This paper attempts to review some prominent internal and external measurement methods of IC. There is a tremendous need for standardization and harmonization across companies and across national boundaries in the field of IC reporting. A solid theoretical base should be achieved at the earliest in order to advance in the field, and future research should focus on the development of IC guidelines as well as their international harmonization. Additionally, researchers should analyse IC reports published by pioneer firms, from around the world, to gather the best learning experiences. With this international insight, firms could be advised on how to introduce a new dimension in transparency that will strengthen its organizational governance. After more than a decade, the IC movement is still growing and more and more organizations are recognizing IC as the essence of business navigation.

Intellectual capital reporting between a developing and developed nation

PurposeThis paper aims to examine the patterns of intellectual capital reporting (ICR) of large listed firms in a developing nation, Sri Lanka. The aim of this study is to highlight the differences in ICR practice between developing and developed nations.Design/methodology/approachThe paper begins by examining each of the top 30 firms by market capitalization listed on the Colombo stock exchange in 1998/1999 and 1999/2000. Using the content analysis method, it reviews the annual reports of these firms to determine the types of intellectual capital (IC) items reported in Sri Lanka. It then compares these findings with a similar study undertaken in Australia during the same period.FindingsThe findings in this paper highlight the need for a uniform ICR definition and a reporting framework that provides comparative and consistent reporting under the auspices of a regulatory body. ICR differences were identified between Sri Lankan and Australian firms, and it is argued that these differences can be attributed to economic, social and political factors.Practical implicationsThis paper highlights important policy issues for Australia, Sri Lanka and other nations. These issues are even more pertinent in the light of the gradual international adoption of the International Financial Reporting Standards (IFRSs), formulated by the International Accounting Standards Board (IASB).Originality/valueMost papers on intellectual capital reporting have focused on firms in developed countries. This paper offers insights into comparative reporting practices between a developed and a developing country.