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Article
Publication date: 1 September 2000

James Guthrie and Richard Petty

This study reports the results of an empirical examination of Australian annual reporting of intellectual capital. The findings suggest that the development of a model for…

Abstract

This study reports the results of an empirical examination of Australian annual reporting of intellectual capital. The findings suggest that the development of a model for reporting intangibles is piecemeal and not widely spread. The outcomes of our exploratory investigation are threefold. First, the key components of intellectual capital are poorly understood, inadequately identified, inefficiently managed, and not reported within a consistent framework when reported at all. Second, the main areas of intellectual capital reporting focus on human resources; technology and intellectual property rights; and organisational and workplace structure. Third, even in an Australian enterprise thought of as “best practice” in this regard, a comprehensive management framework for intellectual capital is yet to be developed, especially for collecting and reporting intellectual capital formation. In conclusion, Australian companies do not compare favourably with several European firms in their ability to measure and report their intellectual capital in the annual report.

Details

Journal of Intellectual Capital, vol. 1 no. 3
Type: Research Article
ISSN: 1469-1930

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Article
Publication date: 23 January 2007

Roland Burgman and Göran Roos

This paper has two purposes: to identify and explain the major forces that are causing the increasing need for operational reporting and intellectual capital (IC) reporting

Abstract

Purpose

This paper has two purposes: to identify and explain the major forces that are causing the increasing need for operational reporting and intellectual capital (IC) reporting for European companies; and to identify the necessary and sufficient conditions for operational and intellectual capital reporting if such reporting is to be meaningful for information users.

Design/methodology/approach

The approach for this paper has been to examine relevant papers, reports, guidelines, compendiums, annual reports, opinions, submissions and legislation.

Findings

Eight determining forces are identified that make the basis of the case for the provision of operating and IC information: the long‐standing global dominance and growth of the US economy; the emergence of business models other than the value chain (especially the emergence of network businesses); the changing nature of stock exchanges; the influence of different investment fund types (mutual, pension and hedge funds); the roles of buy‐side and sell‐side analysts; global and European investment index development; rating agency activity; and financial reporting and corporate governance regime development.

Practical implications

The eight forces are interdependent and immutable. Comprehensive operational and IC reporting are unavoidable. Accordingly, the authors propose that the necessary and sufficient conditions for adequate enterprise information reporting are: a legal requirement for mandatory operational and IC reporting and attendant regulatory framework(s) where the legal framework is based on the concept of neglect; key operating and IC resource status and activity performance definitions and metrics that reflect the enterprise's underlying business model(s); and (3) a mapping of the capitalized operational and IC investments that are by definition normally expensed to the financial report accounts.

Originality/value

The authors believe that no one has previously formally proposed a mandatory operational and IC reporting requirement; a legal reference frame of reference based on the legal concept of neglect; standard definitions for operational and IC performance metrics; a reference framework for information quality that is, inter alia, based on the consistency, comparability and comprehensiveness of reported metrics; and the requirement to map all capitalized IC resources back to the financial reports of the company.

Details

Journal of Intellectual Capital, vol. 8 no. 1
Type: Research Article
ISSN: 1469-1930

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Article
Publication date: 7 January 2014

Tracy-Anne De Silva, Michelle Stratford and Murray Clark

The purpose of this paper is to examine intellectual capital reporting patterns of New Zealand companies over a longitudinal period, comparing knowledge intensive…

Abstract

Purpose

The purpose of this paper is to examine intellectual capital reporting patterns of New Zealand companies over a longitudinal period, comparing knowledge intensive companies with traditional product-based companies.

Design/methodology/approach

Content analysis was used to examine the intellectual capital reporting of five knowledge intensive companies and five traditional product-based companies listed on the New Zealand Stock Exchange during 2004-2010.

Findings

The longitudinal study found that although there was an increase in intellectual capital reporting from 2004 to 2010, there was no strong pattern reflecting a marked increase in reporting over the time period. The findings also show that the level of intellectual capital reporting cannot be determined by the type of organisation. Further, the majority of intellectual capital reporting was found to be in discursive form and only a small percentage of reporting conveyed negative news.

Research limitations/implications

The results of this study are limited by the small sample size overall and the small number of companies in both the knowledge intensive and the traditional product-based groups.

Practical implications

The research suggests areas that could be considered by regulatory bodies and policy makers when developing more informed intellectual capital reporting guidelines.

Originality/value

This research provides a basis for further research, debate and action regarding intellectual capital in both academia and practice. Longitudinal intellectual capital reporting research and distinctions between knowledge intensive and traditional product-based companies have seldom been undertaken. Consequently little is known about the changes in intellectual capital reporting over time or the differences in intellectual capital reporting, if any, between type of company.

Details

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

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Article
Publication date: 1 April 2004

Robin Roslender and Robin Fincham

Accounting for intellectual capital is increasingly recognised to be one of the most fascinating and potentially far‐reaching challenges facing the accountancy profession…

Abstract

Accounting for intellectual capital is increasingly recognised to be one of the most fascinating and potentially far‐reaching challenges facing the accountancy profession. A growing literature, encompassing theoretical, empirical and practical elements, is currently emerging as researchers and practitioners endeavour to account for the hidden value that the intellectual capital concept denotes, and its pivotal role in the value creation process. To date, many of the most instructive advances have emanated from Scandinavia, reflecting these societies' sustained interest in necessity of accounting for the worth of employees, arguably the principal progenitor of intellectual capital accounting. Reports from a number of Australian, Canadian and European enquiries have added to the momentum of the intellectual capital accounting project, whilst affirming its links with contemporary debates about the information society, intangibles, knowledge management and business reporting. This paper reports and discusses some of the findings of a recently completed field study of intellectual capital accounting developments in the UK, funded by one of the professional accountancy bodies. Drawing on a series of semi‐structured interviews, it documents how senior managers in six knowledge‐based organisations view intellectual capital and related developments, their evolving attempts to respond to the challenges these present, and their progress in measuring and reporting their performance in these areas.

Details

Accounting, Auditing & Accountability Journal, vol. 17 no. 2
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 1 June 2005

Fareeha Shareef and Howard Davey

In recent years there has been increasing focus on the importance of intellectual capital disclosure. The major resources of the football industry are human ‐ the players…

Abstract

In recent years there has been increasing focus on the importance of intellectual capital disclosure. The major resources of the football industry are human ‐ the players (as well as coaches and management) and supporters, yet the traditional accounting framework is largely ineffective in capturing these ‘hidden’ values. This paper reviews research on the quality and extent to which 19 listed professional English football clubs are reporting intellectual capital in their annual reports for the 2002 period. A disclosure index was developed and applied, giving scores for categories of disclosure and for the football clubs. The research findings suggest that components of intellectual capital were poorly reported by listed professional football clubs. External capital reporting was the highest scoring category, followed by human capital. However internal capital reporting scored the lowest. The research findings indicated a positive significant correlation between the size of clubs, club performance and their overall intellectual capital disclosure, in line with previous research in different industries. In conclusion, the importance of intellectual capital is recognized in the football industry as evidenced by the quality and quantity of IC disclosure by some clubs. However, the variability in reporting of different components of intellectual capital suggests that there is considerable room for improvement if the key resources of the football industry are to be truly reflected in the accounting system.

Details

Journal of Applied Accounting Research, vol. 7 no. 3
Type: Research Article
ISSN: 0967-5426

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Article
Publication date: 1 June 2000

Richard Petty and James Guthrie

The rise of the “new economy”, one principally driven by information and knowledge, is attributed to the increased prominence of intellectual capital (IC) as a business…

Abstract

The rise of the “new economy”, one principally driven by information and knowledge, is attributed to the increased prominence of intellectual capital (IC) as a business and research topic. Intellectual capital is implicated in recent economic, managerial, technological, and sociological developments in a manner previously unknown and largely unforeseen. Whether these developments are viewed through the filter of the information society, the knowledge‐based economy, the network society, or innovation, there is much to support the assertion that IC is instrumental in the determination of enterprise value and national economic performance. First, we seek to review some of the most significant extant literature on intellectual capital and its developed path. The emphasis is on important theoretical and empirical contributions relating to the measurement and reporting of intellectual capital. The second part of this paper identifies possible future research issues into the nature, impact and value of intellectual management and reporting.

Details

Journal of Intellectual Capital, vol. 1 no. 2
Type: Research Article
ISSN: 1469-1930

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Article
Publication date: 1 June 2003

Kurt A. April, Paul Bosma and Dave A. Deglon

This paper presents findings from an investigation of intellectual capital measurement, reporting and management in the South African mining industry. The research…

Abstract

This paper presents findings from an investigation of intellectual capital measurement, reporting and management in the South African mining industry. The research methodology employs a combination of content analysis of annual reports for the 20 largest listed companies in South Africa, combined with interviews with senior individuals in mining companies. Data is analysed in accordance with a selected intellectual capital framework consisting of 24 indicators across the three categories of internal, external and human capital. Results show that mining companies tend to report on fewer intellectual capital attributes than other companies and tend to focus more on external attributes such as business collaborations and favourable contracts. Results show that mining companies rate intellectual capital highly, but appear to be lacking in the measurement and reporting of intellectual capital. From these findings it is concluded that mining companies value intellectual capital but lack the appropriate systems and structures to manage intellectual capital meaningfully.

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Journal of Intellectual Capital, vol. 4 no. 2
Type: Research Article
ISSN: 1469-1930

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Article
Publication date: 1 March 2005

Patricia Ordoñez de Pablos

In 1994 the Swedish insurance company Skandia published the first intellectual capital report. Following these steps, other European companies decided to report on…

Abstract

Purpose

In 1994 the Swedish insurance company Skandia published the first intellectual capital report. Following these steps, other European companies decided to report on intangible resources. The Indian company, Reliance Industries Limited, published the first Indian intellectual capital report in 1997. Later other Indian companies also started to build and publish this new type of corporate report. Now the question is: are there any differences between Indian intellectual capital reports and European intellectual capital reports? If so, what ideas can be derived from these differences?

Design/methodology/approach

A case study was carried out to analyse how Indian firms build the intellectual capital report. In particular three leading Indian firms were selected: Reliance Industries Limited, Balrampur Chini Mills, and Shree Cement Limited.

Findings

The paper offers insights into how leading Indian firms measure and report knowledge‐based resources. The Indian intellectual capital report does not focus on the business model, values, mission and vision and/or knowledge management issues as in the case of European intellectual capital reports. It presents a “narrative” style. This is a major distinctive feature of Indian reports.

Practical implications

The case study may help other companies to build the intellectual capital report. As the paper also provides a comparative view of Indian and European intellectual capital reports, managers can decide which approach better fits their firms.

Originality/value

Most papers on intellectual capital measuring and reporting focus on European firms. However, this pioneer paper offers some insights into the reporting of intellectual capital in Indian companies.

Details

Journal of Intellectual Capital, vol. 6 no. 1
Type: Research Article
ISSN: 1469-1930

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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.

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: 24 July 2009

Kay Alwert, Manfred Bornemann and Markus Will

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…

Abstract

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 German entities. It focuses on SMEs and their relevant capital market partners, which are banks. The results of the study indicate that also international analysts and companies could profit from additional information about IC.

Practical implications

The results of the study can be used to further develop and adapt IC reports to complement annual reporting according to analysts' requirements.

Originality/value

The paper helps to cover a well‐documented information need of companies that want to communicate their IC to the capital market and do not know how and what kind of impact can be expected.

Details

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

Keywords

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