Determinants of intellectual capital reporting

Abstract

PurposeThe objective of this paper is to examine the determinants (i.e. firm size, profitability, leverage, type of audit firm and industry type) of intellectual capital (IC) disclosure in the annual reports of Malaysian listed companies.Design/methodology/approachThe data were collected from the 2006 annual reports of the selected listed companies; and analyzed using descriptive statistics, t‐test, correlation and regression analyses.FindingsThe paper found that firm size, profitability, industry type are determinants of IC disclosure (ICD) in the annual reports of Malaysian listed companies, while leverage and type of audit firm did not statistically influence ICD.Research limitations/implicationsThe paper only used data from the 2006 annual reports. However, the findings have highlighted the importance of ICD determinants based on data from an emerging economy (i.e. Malaysian economy).Practical implicationsThe paper provides empirical evidence on the current practices and determinants of ICD in the annual reports of the Malaysian listed companies. This evidence would help in understanding and determining factors that influence the extent of ICD. Subsequently, it could assist in enhancing ICD in the annual reports.Originality/valueThe paper contributes by extending the limited ICD literature in Malaysia. Furthermore, the paper has tested more determinants, deemed to influence ICD, compared to prior Malaysian studies. In addition, the paper used a larger sample size with a wider industry coverage compared to previous Malaysian literature.

Factors Affecting Intellectual Capital Disclosures: A Case of Primary Sectors in Thailand

“…Relatively higher resources push firms to disclose IC information in a more specified manner. This result supports previous studies such as White et al (2010); Branco et al (2011); Taliyang et al (2011); Ousama et al (2012); and Ferreira et al (2012).…”

“…Signaling theory can be used in explaining the relationship between ICD and firm profitability; where the higher the profit a firm makes, the more it gives the signal that it has better performance by providing more information on its IC. This argument is supported by Ousama et al (2012) who study ICD in Malaysia, and by Haji & Ghazali (2013). Another reasoning is that with a higher profit margin, managers will be more motivated to give more detailed information, as this is related to the bonus they could receive.…”

“…Eddine et al (2015) reveal that firm size, profitability, and industry type have positive relationships with ICD. In Malaysia, Ousama et al (2012) show that profitability is the key factor in ICD, while Taliyang et al (2011) do not find any significant relationship between profitability and ICD. On a study by Huang et al (2010), firm size does not significantly affect IC disclosure.…”

“…Several empirical studies have tried measuring the factors that affect the creation of intellectual capital in an organization; whether in the shape of value-added capital as suggested by Pulic in 1998(Al-Musali & Ismail, 2015Appuhami & Bhuyan, 2015;Hatane et al, 2017;Nadeem et al, 2017) or as the disclosure of intellectual capital activities (Ousama et al, 2012;Mondal & Ghosh, 2014;Morariu, 2014;Abhayawansah & Azim, 2014;Kamath, 2017). This has become a challenge for further researchers who want to expand on the topic of intellectual capital.…”

The Determinants of Intellectual Capital Disclosure: Evidence from French stock exchange

“…Several authors have confirmed a positive effect of size on the ICD (Guthrie et al 2006, White et al 2007, Oliveira et al 2006, Taliyang et al 2011, Ousama et al 2012, Ferreira et al 2012, El-Bannany 2013. Cordazzo and Vergauwen (2012) did not find any significant relationship where they analyzed the IPO of UK companies operating in the biotechnology sector.…”