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The value relevance of intellectual capital disclosures

Alireza Vafaei (School of Accounting, Faculty of Law and Management, La Trobe University, Melbourne, Australia)
Dennis Taylor (School of Accounting, RMIT University, Melbourne, Australia)
Kamran Ahmed (School of Accounting, Faculty of Law and Management, La Trobe University, Melbourne, Australia)

Journal of Intellectual Capital

ISSN: 1469-1930

Article publication date: 26 July 2011




This study aims to examine whether or not listed companies' disclosure of intellectual capital is value‐relevant in share markets and to assess its moderating role in the value‐relevance of reported earnings and equity following the adoption of international financial reporting standards (IFRS).


A measure of intellectual capital disclosure (ICD), based on a content analysis of the text in annual reports sampled from listed companies in Britain, Australia, Hong Kong and Singapore, is incorporated in the models to examine the direct and moderating roles of ICD in a firm's valuation.


The results reveal that ICD is positively associated with market price (i.e. has value relevance) in companies in two of the four countries and in non‐traditional industries. Further, the incremental value relevance of earnings and net assets is mostly non‐significant; however, interaction of these variables with ICD considerably increases the basic coefficients and the explanatory power of the models.

Research limitations/implications

Prior research on the value relevance of reported accounting numbers has not considered the incremental effect of textual ICD in annual reports. This study extends value relevance models by combining textual ICD with accounting numbers in an attempt to assess investors' valuation of firms.

Practical implications

From the findings, a case is made for corporate management (particularly in certain countries and industries) to integrate its accounting policy choices regarding good will and intangibles with its strategies for disclosure of broad intellectual capital information.


First‐time evidence is provided that text‐based ICD is value‐relevant in capital markets and on its moderating effect for the value‐relevance of reported accounting numbers.



Vafaei, A., Taylor, D. and Ahmed, K. (2011), "The value relevance of intellectual capital disclosures", Journal of Intellectual Capital, Vol. 12 No. 3, pp. 407-429.



Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited

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