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This paper aims to measure mean voluntary intellectual capital disclosure (ICD) quality score for a sample of Australian Stock Exchange-listed biotechnology firms in the 2003, 2006 and 2010 reporting periods. The aim was to use data for the same companies over the whole period to discover whether the quality of voluntary reporting practice was improving over time, measuring lagged-mean ICD quality score against possible determinants of management disclosure practice.

Mean ICD quality score, and associated frequency data, was measured against possible determinants of managers’ disclosure practice. The dependent variable was an 18-item classification of ICD based on Sveiby’s Intangible Assets Monitor (Sveiby, 1997). Data collected from S&P Capital IQ database were used to compare ICD disclosure quality with possible drivers: competition (capital intensity); performance (profit and market returns); monitoring (audit firm and ownership); and control variables (revenue and leverage).

Mean voluntary disclosures of internal capital and external capital lower the quality over time using paired sample t-test comparison against 2003 as a base year. The lowest quality disclosure was about human capital, and the highest quality was about internal capital. Individual disclosure items within internal, external and human capital classification showed that internal capital items (intellectual property, corporate culture, management processes and financial relations) and external capital item (customers) were the significant contributors. Investigation of drivers using Spearman’s correlation against lagged ICD data showed that performance (relative market returns) and monitoring (ownership diffusion) were significant drivers of voluntary ICD, both in expected and unexpected ways.

Voluntary ICD quality and quantity are rarely measured in the same paper. The findings are unique and interesting especially for innovative Australian R&D firms when compared to recent findings for a larger sample of French companies.

The purpose of this research project is to compare the nature and extent of voluntary intellectual capital disclosures (ICD) by UK and Australian biotechnology companies. The motivating research question was whether the nature and extent of voluntary ICD by preparers of financial report data in these countries reflected the relative maturity of the UK, compared to Australian industry.

ICD was measured in annual reports and financial statements published on the company websites. A Danish disclosure index was used to evaluate voluntary disclosures by 156 companies about customers, employees, IT, strategy, R&D and processes (78‐items scored for each company).

A significant leverage effect was demonstrated in relation to the “nature” of ICD by UK and Australian biotechnology companies. Interestingly, mean customer ICD were higher in annual reports from high‐leveraged compared to low‐leveraged Australian firms. In contrast, UK firms showed higher mean R&D ICD for low‐leveraged firms than high‐leveraged firms. With regards to the “extent” of ICD measured, the study demonstrated a significant country effect.

Potential limitations or bias may exist from the use of the disclosure index: binary scoring of disclosure versus non‐disclosure reduces the richness of data otherwise obtainable by limited case study or interviews; and data collection is limiting – narrative with managers actually preparing ICD is not possible.

Australian company financial accountants and managers preparing and/or including ICD information could be in danger of underestimating the importance of information asymmetry existing with lenders.

This finding contrasts the legitimate R&D focused ICD of low‐leveraged UK firms; namely to attract stakeholder attention to their expanding intellectual property base, with the findings from Australian firms' with a relatively predictable and naïve customer focus.