Determinants of intellectual capital disclosure: evidence from Australia

Abstract

Purpose-The purpose of this paper is to examine determinants of the decision to disclose intellectual capital in annual reports. Design/methodology/approach-The paper derives theoretical predictions from the previous literature and bases the study on archival data with a sample of 125 publicly listed Australian firms. The authors perform a content analysis of annual reports and complement the data with quantitative data from the sample firms. Findings-The paper finds that industry type plays a key role as a determinant for the disclosure of intellectual property in annual reports. In addition, firm size is another determinant for intellectual disclosure of firms. In contrast with earlier studies and theoretical predictions of voluntary disclosure, however, the paper does not find any relationship between the level of information asymmetry and intellectual capital disclosure. Research limitations/implications-One limitation refers to the content analysis. Analyzing the annual reports based on the specified list of IC-related terms may not provide the whole picture as well as the IC disclosure practices. Despite these limitations, the study helps to understand better in general what kind of firms actually disclose information on intellectual capital. Originality/value-In contrast with earlier studies the study uses significantly more observations, which makes the results more reliable and generalizable. Of further significance is the finding that information asymmetry-one of the main problems between investors and firms-is not driving the decision of firms to disclose information on intellectual capital.

Intellectual Capital Disclosure and Corporate Governance Structure: Evidence in Malaysia

“…The congress categorized the 36 terms into three categories; (a) human capital; (b) structural capital and (c) relational capital. Because of the presence of some general terms related to the field of intellectual capital, Bruggen (2009) in his study modified the model by placing additional terms into the fourth category called "General Terms". None of relational capital terms appear in the sample firm's annual report.…”

“…To date, various studies has been done by many researchers to examine the determinants of intellectual capital disclosure around the world such as (Taliyang, 2011;Bruggen, 2009;White et al, 2007;Zaludin, 2007;Ousama Anam, 2007, Garcia-Meca et al, 2005 and many more. It can be concluded that a few variables such as company age, size, profitability and growth can be considered as control variables and significantly influence the level of intellectual capital disclosure for the companies.…”

Contingency factors influencing the availability of internal intellectual capital information

“…Previous research such as Brennan (2001), Bozzolan et al (2003) and Bruggen et al (2009) found that industry type is an important factor for external IC disclosures as IC is in some industries more important than in others. However, Bontis et al (2000) found that IC has a significant relationship with business performance regardless of industry sector among…”

“…Size was found to have a significant impact on the level of external IC disclosures in most studies (Bozzolan et al, 2003;Guthrie et al, 2006;Beaulieu et al, 2002;Bruggen et al, 2009). But, not all studies conclude that the size of the company is a significant factor in explaining voluntary publication of information (Bukh et al, 2003).…”

The Relationship Between the Intellectual Capital Disclosure and Cost of Debt Capital – A Case of Slovenian Private Audited Organisations

“…It can be broadly classified into (1) the research on factors which have an impact on intellectual capital disclosures (e.g. size of the organisation and industry type (Brüggen et al, 2009;Whiting & Woodcock, 2011), firm age (White et al, 2007;Sonnier et al, 2009), corporate governance (Li et al, 2008;Hidalgo et al, 2011;Haji & Ghazali, 2013), listing status (Williams, 2001)), and (2) the research which assesses the impact of intellectual capital disclosures on different areas of organisation's performance and its valuation. The latter research provides evidence on, for example, significant and positive effect of intellectual capital disclosures on market capitalization and firm value (Abdolmohammadi, 2005;Orens et al, 2009), the impact of intellectual capital disclosures on the reduction of information asymmetry (Orens et al, 2009;An et al, 2011) and (consequently) the impact of voluntary intellectual capital disclosures on the reduction of the cost of equity capital (Orens et al, 2009;Boujelbene & Affes, 2013;Mangena et al, 2010Mangena et al, , 2016.…”