Intellectual capital disclosure, cost of finance and firm value

Abstract

Purpose -The purpose of this paper is to examine empirically the impact of web-based intellectual capital (IC) reporting on firm's value and its cost of finance. Design/methodology/approach -A content-analysis of corporate web sites is conducted from four continental European countries (Belgium, France, Germany and The Netherlands) on the presence of IC information. Simultaneous regression modelling is used to control for endogeneity within a firm's disclosure strategy. Findings -The data show that cross-sectional differences in the extent of IC disclosure are positively associated with firm value. Greater IC disclosure in continental Europe is associated with lower information asymmetry, lower implied cost of equity capital and lower rate of interest paid. Research limitations/implications -The study is restricted to an analysis of firm's benefits of increased web-based disclosure without considering related costs. Practical implications -The results of the study show that firms tend to benefit economically from better IC disclosure. Originality/value -Existing evidence is extended by considering the capital market implications of IC related disclosure and web-based related disclosure.

Relationship between Unionized Companies, Government Ownership and Reporting Human Capital Information in Corporate Annual Reports

“…The absence of HCD results in the uncertainty of real economic value, particularly for services and technology companies that heavily hinge on human intelligence. Thus, investing in these companies is substantially risky (Marr, Mouritsen & Bukh 2003;Orens, Aerts & Lybaert 2009). Although no mandatory requirement is necessary to disclose human capital information, numerous companies around the globe voluntarily report such information, particularly through their corporate annual reports.…”

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

“…jelbene & Affes, 2013; Taliyang et al, 2014;Mangena et al, 2010Mangena et al, , 2016, whereas only a few studies addressed this issue from the perspective on lenders and/or in relation to the cost of debt capital (Orens et al, 2009;Hsuehchang, 2013). Considering the significance of agency issues and public availability of information about intellectual capital (Williams, 2001;Bozzolan et al, 2003;Abdolmohammadi, 2005;Abeysekera, 2006), the research into the associations between intellectual capital disclosures and the cost of debt capital (Orens et al, 2009;Hsuehchang, 2013) has focused on listed organisations.…”

“…Orens et al, 2009;Boujelbene & Affes, 2013;Mangena et al, 2010Mangena et al, , 2016. For that reason, a number of studies focused on the importance of such disclosures for owners (e.g.…”

“…For that reason, a number of studies focused on the importance of such disclosures for owners (e.g. Abdolmohammadi, 2005;Orens et al, 2009;Bou-1 The classification of a large number of intellectual capital items into different sub-categories adequately supplements its definition (Choong, 2008, p. 617). Human capital thus comprises skills and knowledge of employees and can be studied at individual level (e.g.…”

“…Considering the significance of agency issues and public availability of information about intellectual capital (Williams, 2001;Bozzolan et al, 2003;Abdolmohammadi, 2005;Abeysekera, 2006), the research into the associations between intellectual capital disclosures and the cost of debt capital (Orens et al, 2009;Hsuehchang, 2013) has focused on listed organisations. Although there may exist the agency issue regarding private (non-listed) organisations with lenders as the main source of external financing (Koren et al, 2014), we have not been able to find empirical research on the associations between intellectual capital disclosures of such private organisations and the cost of their debt.…”