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Financial statement informativeness and intellectual capital disclosure: An empirical analysis

Anis Maaloul (École des sciences de l'administration, TÉLUQ - Université du Québec, Québec, Canada)
Daniel Zéghal (Telfer School of Management, University of Ottawa, Ottawa, Canada)

Journal of Financial Reporting and Accounting

ISSN: 1985-2517

Article publication date: 6 July 2015

Abstract

Purpose

The purpose of this paper is to analyse the relationship between financial statement informativeness (FSI) and intellectual capital disclosure (ICD).

Design/methodology/approach

While FSI was measured as the explanatory power of financial information in explaining market value, ICD was collected through content analysis of annual reports. A sample of 126 US companies, divided into two groups – high-tech and low-tech companies – were used in this study. Empirical analysis was carried out using the Poisson regression method.

Findings

The results show a negative (substitutive) relationship between FSI and ICD, especially in high-tech companies. This indicates that companies with low FSI disclose more information about their IC in annual reports.

Practical implications

This study confirms the role of voluntary ICD as a solution towards mitigating the problem of the distortion of financial information due to the lack of accounting recognition of IC as an asset in the financial statements.

Originality/value

This is the first empirical study to analyse the relationship between FSI and ICD. Therefore, it serves as feedback to the regulators and standard-setters that recently published recommendations on voluntarily disclosing IC.

Keywords

Acknowledgements

The authors gratefully acknowledge the support of the CPA-Canada Accounting and Governance Research Centre at the University of Ottawa.

Citation

Maaloul, A. and Zéghal, D. (2015), "Financial statement informativeness and intellectual capital disclosure: An empirical analysis", Journal of Financial Reporting and Accounting, Vol. 13 No. 1, pp. 66-90. https://doi.org/10.1108/JFRA-04-2014-0023

Publisher

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Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited