Level Of Intellectual Capital Disclosure Research Articles

Intellectual capital disclosure and accounting standards

PurposeThis study aims to investigate the association between the intellectual capital disclosure level and the mandatory adoption of international financial reporting standards (IFRS). This paper reports an empirical evidence for the impact of the mandatory adoption of IFRS on the disclosure level of intellectual capital, intangible and knowledge assets. Intellectual capital is categorized into process focus, customer focus, human focus, research and development focus. The linkages between intellectual capital and IFRS adoption are investigated in companies of high technology sector in the UK. A novel approach to measure the effect of the IFRS adoption on intellectual capital disclosure level is presented.Design/methodology/approachThe proposed measure was adopted from the information retrieval algorithm and intellectual capital framework. The empirical model was expanded from the econometric model. The primary data for investigating the interrelationships between intellectual capital and IFRS adopting were hand collected from London Stock Exchange and listed firms' web sites. A comprehensive intellectual capital, intangible assets, and knowledge assets' dictionary were built based on related literature.FindingsThis study reports that the overall accuracy of information retrieval application is up to 78.2 percent. The disclosures of intellectual capital items are closely associated with the IFRS adoption. The results suggest that in older or larger companies, the intellectual capital disclosures increase in the post‐adoption period. Overall, the results confirm that companies in the high‐tech industry are associated with a higher disclosure level following the mandatory adoption of IFRS.Originality/valueThe adaption of information retrieval technique and intellectual capital framework enhances the understanding of the usefulness and readability of annual reports in the post‐adoption period of IFRS in high‐tech industry. This study corroborates and complements those of extant research and sheds light on the effect of IFRS adoption on voluntary disclosures. These findings will enable top management around the world to realize the impact of the IFRS adoption on intellectual capital elements so that long‐term strategic knowledge assets management may be emphasized for sustainable competitive edge.

Impact of Global Financial Crisis and other Determinants on Intellectual Capital Disclosure in UAE Banks

The aim of this study is to investigate the impact of global financial crisis, market structure and other factors on the disclosure level of intellectual capital by UAE Banks over the period 2005-2009. The Multiple Regression Analysis is used to test the relationship between the level of intellectual capital disclosure as a dependent variable and global financial disclosure, market structure and other independent variables. The results show that global financial crisis and market structure variables, which have not been considered in previous studies, have a significant impact on the level of intellectual capital disclosure. In addition, the results show that bank risk, role duality and bank age have a significant impact on the level of intellectual capital disclosure. This paper adds to the literature on the determinants of the level of intellectual capital disclosure in banks. In particular, it tests the new theories that the global financial crisis and market structure have impact on the level of intellectual capital disclosure.

Pengaruh Karakteristik Perusahaan Terhadap Intellectual Capital Disclosure (ICD) Pada Perusahaan Non Keuangan Yang Terdaftar Di Bursa Efek Indonesia

The purpose of this paper is to examine the level of intellectual capital disclosure in annual report prepared by listed firms on IDX. This research examines influence between intellectual capital disclosure as a dependent variable and firm’s characteristic (industry type, leverage, ownership concentration, external auditor type, listing age, independent commissioner, audit committee size and firm’s size) as independent variables. This research used 105 annual reports 2010 of Indonesian listed firms. Sample was selected using purposive sampling method. The result shows that the average level of intellectual capital disclosure is only 35,86%. Multiple regression analysis is used to test the hypothesis. Statistical analysis demonstrates that audit committee size and firm’s size are significance to the level of intellectual capital disclosure.

A model to explain intellectual capital disclosure in UAE banks

The aim of this study is to formulate a model to explain the reasons for the changes in the disclosure level of intellectual capital by UAE National Banks over the period 2005–2009. Multiple regression analysis is used to test the relationship between the level of intellectual capital disclosure as a dependent variable and certain independent variables. The results show that total reserves as a comprehensive bank risks indicator and customer satisfaction and loyalty variables which have not been considered in previous studies, have a significant impact on the level of intellectual capital disclosure. In addition, the results shows that bank size and bank age have significant impact on the level of intellectual capital disclosure. On the other hand, the results show that human capital pressure variable, which has not been considered in previous studies and variable of role duality has no impact on the level of intellectual capital disclosure.

Intellectual capital disclosure and corporate governance structure among Malaysian government-linked companies

This study examines the level of intellectual capital disclosure among the 32 Malaysian GLCs by comparing with the Non-GLCs for the period 2007-2009. In addition, this study also investigates the impact of board structure on the intellectual capital disclosure of Malaysian GLCs. The board structure mechanisms comprise; board composition, role duality, board size and cross directorship. The control variables consist of the company-specific characteristics –leverage, profitability and age of the company. The content analysis is used to extract the intellectual capital disclosure items from the annual report. The results show that the GLCs disclosed more intellectual capital information than Non-GLCs. Board size and leverage are significant and positively related to the intellectual capital disclosure of Malaysian GLCs.

Intellectual capital disclosure in the UK biotechnology IPO prospectuses

PurposeThe purpose of this paper is to investigate the extent of intellectual capital (IC) disclosure on the UK biotechnology initial public offering (IPO) prospectuses. The study is based on companies going public on the London Stock Exchange (LSE) and the London Alternative Investment Market (AIM) over the period 2005‐2007.Design/methodology/approachThe extent of IC disclosure is collected and measured by using the IC disclosure index and the framework proposed by Bukh et al. The differences in the level of IC disclosure are analysed by modelling some firm‐specific determinants such as size, maturity, age and independence of the board.FindingsIt is shown that primary listing companies on the LSE disclose more IC information than those on the London AIM. Maturity and independence of the board are associated with IC disclosure, while size and age are not related, showing the importance of corporate communication as a signal of credibility to possible investors at IPO stage.Originality/valueThe main contribution of the paper is to analyse IC disclosure in the UK biotechnology IPO prospectuses. Previous literature does not focus on this reporting genre as an important corporate communication tool, as most research investigates IC disclosure only in annual reports and country regulation settings.

Intellectual Capital Disclosure and Corporate Governance Structure: Evidence in Malaysia

The objectives of this paper are to investigate the extent of the intellectual capital disclosure and the relationship between intellectual capital disclosure and corporate governance variables in Malaysian public listed companies. The independent variables tested in this study comprise various forms of corporate governance structure: (1) board composition, (2) role duality, (3) size of audit committee and (4) frequency of audit committee meetings. A sample of 150 companies listed in Bursa Malaysia was selected consisting of five industries which are Information Technology, Consumer Product, Industrial Product, Trading/Services and Finance. The descriptive statistics, content analysis and linear regression model were performed to analyze the data. Out of 4 variables tested, only the frequency of audit committee meeting has significant positive relationship in influencing the level of intellectual capital disclosure in Malaysia. The result also found 72.6 percent of the selected companies disclosed intellectual capital in their annual reports. However the extent of the intellectual capital disclosure among Malaysian companies is still relatively low about 3.45 percent. This result revealed that most of Malaysian companies are aware about the intellectual capital disclosure, however, they are not aware on how to measure, report and disclose this information in their annual report.

Intellectual capital prospectus disclosure and post‐issue stock performance

PurposeThe primary purpose of this paper is to investigate the association between intellectual capital disclosures in initial public offerings (IPOs) and post‐issue stock performance.Design/methodology/approachThe analysis is based on a sample of 259 IPOs listing on the Singapore Stock Exchange (SGX) between July 1, 1999 and June 30, 2005. Post‐issue stock performance is measured using market‐adjusted buy‐and‐hold returns across a 500 trading day observation window after listing. Intellectual capital disclosure is measured using an 81‐item index.FindingsThe study's major finding is a negative association between the level of intellectual capital disclosure in IPO prospectuses and post‐issue stock performance. The negative association persists regardless of industry type but is stronger for small IPOs relative to larger counterparts.Research limitations/implicationsThe study includes only Singapore IPOs within a specific timeframe concentrating on a single disclosure mechanism. Furthermore, the analysis focuses on an association rather than causal relationship.Practical implicationsThe findings imply greater intellectual capital prospectus disclosure may contribute to investor over‐optimism leading to higher IPO mispricing. As information becomes available post‐issue, and over‐optimistic expectations are not immediately met, investors aggressively discount shares leading to greater negative post‐issue stock performance for high IC disclosing IPOs. Pre‐listing owners/management may exploit the speculative environment generating higher wealth transfers from investors. Policymakers may need to introduce (some) uniform intellectual capital disclosure requirements to reduce speculative market conditions.Originality/valueThis paper documents the first study to provide empirical evidence of the association between intellectual capital disclosures and post‐issue stock performance; thus, it offers a new path for future intellectual capital disclosure research and understanding.

Narrative reporting of intellectual capital by the New Zealand local government sector

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.

Intellectual capital disclosure: high‐tech versus traditional sector companies

Purpose – The purpose of this study is to compare the level of intellectual capital disclosure (ICD) of firms in the high technology and traditional sectors of the economy.Design/methodology/approach – In order to provide a framework to evaluate the level of disclosure of the different categories of intellectual capital (IC), the author develops an IC model based on an integration of the resource‐based view (RBV) of the firm, the knowledge management, and IC literature. The model is called the RBV IC model. Content analysis was conducted using the SEC Form 10‐K annual reports of 143 high‐technology companies (HTCs) and 141 traditional sector companies (TSCs) US publicly traded firms for fiscal year 2000 and 2004. The components of IC as delineated in the RBV IC model are the subject of the analysis with the frequency of disclosure being used as the measure of disclosure.Findings – HTCs had a higher frequency of disclosure of customer capital, organizational capital, human capital, and intellectual propert...

Intellectual capital disclosure by traditional US companies: a longitudinal assessment

PurposeThe paper aims to evaluate 141 publicly traded US firms in the traditional sectors of the economy to assess intellectual capital disclosure levels.Design/methodology/approachContent analysis was conducted using 10‐K annual reports.FindingsIt was found that traditional sector companies had a mean disclosure of intellectual capital of 24.227 in fiscal year 2000 and 27.709 in fiscal year 2004 (t=3.68, df = 140, p=0.01). This supported the authors hypothesis that traditional sector companies would show an increase in the level of intellectual capital disclosure in 2004 as compared to 2000. Within the total sample, 78 companies increased their intellectual capital disclosure in fiscal year 2004 as compared to fiscal year 2000 (z=−3.4756, p=0.01).Research limitations/implicationsWhile the authors generated 121 phrases to tap the intellectual capital construct, there may be other word combinations given the differences in vocabulary between academia and the corporate world.Practical implicationsThese findings are particularly noteworthy because traditional sector companies are capital intensive and are reliant upon fixed assets which are reported on the balance sheet. This study suggests that even managers in the traditional sectors of the US economy are coming to recognize the growing importance of intellectual capital.Originality/valueThis is the only longitudinal study to focus on intellectual capital disclosure of traditional firms in the USA, and this research was conducted over the time that the Financial Accounting Standards Board called for increased disclosure of intangible assets.

Determinants of intellectual capital disclosure in prospectuses of initial public offerings

Intellectual capital is recognised as the new economic era’s pivotal factor underlying value creation. Deficient and inconsistent intellectual capital reporting is escalating information asymmetry between informed and uninformed investors. This provides fertile ground for informed investors to extract higher abnormal returns andhigher wealth transfers from uninformed investors, particularly during a firm’s initial public offering (IPO). This study investigates the association between intellectual capital disclosure levels in prospectuses of 444 IPOs listing on the Singapore Stock Exchange between 1997 and 2006, and three potential explanatory determinants: (1) ownership retention; (2) proprietary costs; and (3) corporate governance structure. Statistical analysis supports our conjecture of a positive association between intellectual capital disclosure and ownership retention. We also find, consistent with expectations, a negative influence of proprietary costs on the positive intellectual capital disclosure – ownership retention association. However, contrary to predictions, we do not find an IPO’s corporate governance structure significantly influences the negative interaction of proprietary costs on the ownership retention – proprietary cost association. Our findings have implications for various parties such as regulators who may impose unnecessary costs on issuers if they introduce mandatory disclosures whilst lacking an understanding of the factors influencing intellectual capital disclosures.

An Examination of The Impact of Firm Size and Age On Managerial Disclosure of Intellectual Capital By High-Tech Companies

A sample of 143 high-technology firms was examined to determine if therewere inverse relationships between the size and age of companies and their levelof intellectual capital disclosure. Weak inverse relationships were found betweennumber of employees and level of disclosure and between total assets and levelof disclosure. There was, however, a significant inverse relationship between firmage and level of disclosure. Multivariate regression provided support that firm agewas a significant predictor of level of intellectual capital disclosure. It appears thatyoung companies use increased disclosure to signal to the market their real valueand prospects.