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Article
Publication date: 1 September 2001

S. Mitchell Williams

Breaks with the prior literature on intellectual capital disclosure practices in two major ways. First, provides a longitudinal examination of intellectual capital

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Abstract

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.

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Journal of Intellectual Capital, vol. 2 no. 3
Type: Research Article
ISSN: 1469-1930

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Book part
Publication date: 31 December 2010

This study gave rise to four policy recommendations. First, firms are encouraged to use both narrative and visual forms of disclosure to complement one another in…

Abstract

This study gave rise to four policy recommendations. First, firms are encouraged to use both narrative and visual forms of disclosure to complement one another in disclosing intellectual capital resource items on websites. Secondly, it is important to conduct an awareness program about intellectual capital disclosure on websites so that small firms become aware of the positive impact such disclosure can have in enhancing corporate reputation. Thirdly, firms should prepare guidelines for intellectual capital disclosure on websites so that they can favour a best practice model. Finally, fostering a dialogue between stakeholders and the accounting regulators can help to streamline intellectual capital disclosure for more value relevant, forward-looking information. These points are elaborated in the following.

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Reputation Building, Website Disclosure and the Case of Intellectual Capital
Type: Book
ISBN: 978-0-85724-506-9

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Article
Publication date: 29 April 2021

Khushdeep Dharni and Saddam Jameel

This study highlights the trends of qualitative intellectual capital disclosures and patent statistics in the Indian manufacturing context by considering the numerous…

Abstract

Purpose

This study highlights the trends of qualitative intellectual capital disclosures and patent statistics in the Indian manufacturing context by considering the numerous patent applications, patent grants, forward citations and backward citations. Furthermore, the study investigates the relation among qualitative disclosures, patent statistics and firm performance.

Design/methodology/approach

All manufacturing companies of CNX 500 Index of National Stock Exchange of India Limited are considered. Based on data availability, 243 manufacturing firms spanning across seven major manufacturing sectors are included. Secondary data were obtained from the annual report of companies and patent databases from 2004 to 2005 to 2013–2014, generating a sample of 2,430 firm years. Content analysis and citation analysis are used for collecting the relevant data.

Findings

Overall, the study results indicated increasing trends for all types of intellectual capital disclosures. Similar trends are observed for patent applications and patent grants, indicating a surge in patenting activities across the manufacturing sector. However, increasing trends in patenting activities are not reflected for forward and backward citations. In addition, significant differences in means and trend coefficients for qualitative disclosures and patent statistics indicated industry specificity within the Indian manufacturing sector. Furthermore, industry specificity is observed when translating intellectual capital to firm performance. The measure of firm performance, that is, Tobin's Q, is having a significant positive association with qualitative disclosures and patent statistics.

Research limitations/implications

As the study is based on secondary data, its accuracy is limited by the accuracy of the data sources such as the annual reports of companies and patent databases.

Practical implications

The study findings imply that policymakers should devise and execute sector-specific policy interventions. Moreover, managers and policymakers should emphasize the qualitative aspect of patenting activities.

Originality/value

The study is an original work that highlights the trends in qualitative disclosures in the Indian manufacturing context. The value relevance of intellectual capital and patent statistics has been established.

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Journal of Intellectual Capital, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1469-1930

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Article
Publication date: 6 March 2017

Xiaochang Yan

The purpose of this paper is to study the influences of corporate governance on intellectual capital disclosures in chief executive officers’ (CEOs’) statements in annual reports.

Abstract

Purpose

The purpose of this paper is to study the influences of corporate governance on intellectual capital disclosures in chief executive officers’ (CEOs’) statements in annual reports.

Design/methodology/approach

Index score, word count and overall tone of CEOs’ intellectual capital disclosures are calculated to represent the extent, amount and tone of these disclosures, respectively. With a sample of 78 FTSE 100 companies, this paper uses content analysis and empirical analysis to examine the impacts of board size, board composition and shares concentration on the above three measures of CEOs’ intellectual capital disclosures, controlling for company size, profitability and leverage ratio.

Findings

Empirical results demonstrate a significant positive relationship between board composition and the extent, amount and tone of CEOs’ intellectual capital disclosures and a significant negative relationship between shares concentration and the amount of these disclosures.

Originality/value

This paper focuses on the impacts of corporate governance on CEOs’ intellectual capital disclosures. It also groundbreakingly measures the tone of CEOs’ disclosures.

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Nankai Business Review International, vol. 8 no. 1
Type: Research Article
ISSN: 2040-8749

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Article
Publication date: 24 July 2009

Inderpal Singh and J‐L.W. Mitchell Van der Zahn

The primary purpose of this paper is to investigate the association between intellectual capital disclosures in initial public offerings (IPOs) and post‐issue stock performance.

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1948

Abstract

Purpose

The 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/approach

The 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.

Findings

The 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/implications

The 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 implications

The 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/value

This 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.

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Journal of Intellectual Capital, vol. 10 no. 3
Type: Research Article
ISSN: 1469-1930

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Article
Publication date: 9 October 2017

Sarishma Sharma and Khushdeep Dharni

The purpose of this paper is to study the status and trend of intellectual capital disclosures by selected companies in India. Three categories of intellectual capital

Abstract

Purpose

The purpose of this paper is to study the status and trend of intellectual capital disclosures by selected companies in India. Three categories of intellectual capital disclosures across six industry groups were measured. The relation of the three categories of disclosures, i.e. human capital, relational capital and structural capital disclosures with the measures of organisational performance such as sales, R&D, R&D intensity, net profit and export intensity has also been studied.

Design/methodology/approach

Based on National Industrial Classification 2008, six sectors, namely pharmaceutical, basic metals, industrial manufacturing, energy, financial services and information technology were included in the study and 20 companies were selected from each sector based on the availability of data from 2004-2005 to 2013-2014, thus, making a sample of 1,200 firm-years. For collecting the data, a list of keywords related to various dimensions of intellectual capital was prepared and the count of keywords was searched in the annual reports of the companies.

Findings

Significant and positive trend coefficients were found in the majority of the sectors. Analysis revealed that trend coefficients differed across various sectors indicating the presence of sector specificity. Results of trend analysis reveal that structural capital-related disclosures have stagnated in case of pharmaceutical sector after hitting the peak. Significant variations were found across sectors in terms of all three types of intellectual capital disclosures. Results of study empirically support the fact that intellectual capital disclosures tend to increase with size of the organisation.

Research limitations/implications

As data have been collected from annual reports of the companies, the accuracy of the findings is limited to the accuracy of the reported data.

Originality/value

The study is an original piece of work. This study provides an insight into the disclosure trend of intellectual capital in an emerging economy.

Details

Journal of Intellectual Capital, vol. 18 no. 4
Type: Research Article
ISSN: 1469-1930

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Book part
Publication date: 27 January 2014

Nicoleta Maria Ienciu and Dumitru Matiș

This chapter expands the existing literature by examining voluntary intellectual capital disclosure provided by listed Romanian companies in 2010 annual reports.

Abstract

Purpose

This chapter expands the existing literature by examining voluntary intellectual capital disclosure provided by listed Romanian companies in 2010 annual reports.

Design/methodology/approach

The chapter aims to determine the extent of intellectual capital disclosure within Romanian listed companies. Within this chapter we have conducted a content analysis using the annual reports of 71 companies listed on Bucharest Stock Exchange (BSE), main market (Bursa de Valori Bucure_ti – BVB). The intellectual capital framework developed by Sveiby in 1997 was used in our analysis and the frequency of disclosure was used as the measure of disclosure.

Findings

The results show that the key components of intellectual capital are relatively poorly reported by Romanian listed companies. The main areas of intellectual capital disclosure focus firstly on structural capital, then on relational capital and at the end on human capital.

Research limitations/implications

The existence of information related to intellectual capital is used as the measure of the level of intellectual capital disclosure. Also, our exploratory investigation concerns only one fiscal year.

Originality/value

According to the authors’ knowledge the present chapter is a pioneering study developed at national level which highlights the intellectual capital disclosure practices of Romanian listed companies by examining their 2010 annual reports. The chapter highlights new insights of the level of intellectual capital disclosure within companies which operates in small capital market.

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Accounting in Central and Eastern Europe
Type: Book
ISBN: 978-1-78190-939-3

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Article
Publication date: 25 July 2008

Annika Schneider and Grant Samkin

The purpose of this paper is to assess the extent and quality of intellectual capital disclosures (ICDs) in the annual reports of the New Zealand local government sector.

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2391

Abstract

Purpose

The purpose of this paper is to assess the extent and quality of intellectual capital disclosures (ICDs) in the annual reports of the New Zealand local government sector.

Design/methodology/approach

This paper makes use of an ICD index constructed through a participatory stakeholder consultation process to develop a disclosure index which measures the extent and quality intellectual capital reporting in the 2004/2005 annual reports of 82 local government authorities in New Zealand. The final index comprised 26 items divided into three categories: internal, external and human capital.

Findings

The results indicate that the reporting of intellectual capital by local government authorities is varied. The most reported items were joint ventures/business collaborations and management processes, while the least reported items were intellectual property and licensing agreements. The most reported category of intellectual capital was internal capital, followed by external capital. Human capital was the least reported category.

Research limitations/implications

There are a number of limitations associated with this study. First the research covered only one year (2004/2005) which makes it difficult to draw any trend conclusions. Second, differing legal reporting requirements may make it difficult to compare findings of this research with findings of research conducted in other jurisdictions. The final limitation of this study is its exploratory nature of this research and the use of a disclosure index to measure disclosure levels.

Practical implications

The results in this paper indicate that local authorities are disclosing some aspects of intellectual capital in their annual reports. However, there is no consistent reporting framework and many areas of ICDs do not meet stakeholder expectations.

Originality/value

This paper is unique in that it is the first study to make use of an ICD index to examine intellectual capital reporting by local government authorities.

Details

Journal of Intellectual Capital, vol. 9 no. 3
Type: Research Article
ISSN: 1469-1930

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Article
Publication date: 14 September 2015

Frank Schiemann, Kai Richter and Thomas Günther

The capitalisation of intangible investments is discussed controversially in the financial accounting literature. International accounting standards are concerned with…

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1797

Abstract

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.

Details

Journal of Applied Accounting Research, vol. 16 no. 2
Type: Research Article
ISSN: 0967-5426

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Article
Publication date: 7 January 2014

Omar Farooq and Christian Nielsen

The purpose of this paper is to document the relationship between intellectual capital disclosure and analyst following for biotechnology firms listed on the Copenhagen…

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1361

Abstract

Purpose

The purpose of this paper is to document the relationship between intellectual capital disclosure and analyst following for biotechnology firms listed on the Copenhagen Stock Exchange between 2001 and 2010.

Design/methodology/approach

Intellectual capital disclosure was computed from financial statements applying the disclosure index of Bukh et al. (2005), while analyst following data were retrieved from the Institutional Brokers’ Estimate System (I/B/E/S).

Findings

The results show that analysts are more likely to follow firms with high intellectual capital disclosure. This finding suggests that analysts wish to follow those firms for which they have more information. The results also show that the most important intellectual capital disclosures for analysts are those related to employees and strategic statements. This paper therefore expands on previous results by raising awareness of which information companies should disclose to the capital market in order to improve analyst following, in turn helping to improve the general disclosure environment.

Research limitations/implications

More relevant methods, such as surveys or interviews with management, could be used to improve the information content of intellectual capital disclosure. Analysts probably deduce the intellectual capital of a firm from interaction with management rather than financial statements.

Practical implications

Firms in and beyond the biotechnology sector can improve their information environment by disclosing more information on intellectual capital in relation to employees and strategic statements in their financial statements.

Originality/value

The findings shed light on the importance of understanding intellectual capital in the biotechnology sector for analysts and investors who wish to value such firms.

Details

Journal of Intellectual Capital, vol. 15 no. 1
Type: Research Article
ISSN: 1469-1930

Keywords

1 – 10 of over 4000