Article2005

Bridging the gap between disclosure and use of intellectual capital information

98 citations0/0 files storedJournal of Intellectual Capital

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Intellectual Capital and Performance Analysis Auditing, Earnings Management, Governance Accounting Theory and Financial Reporting

Abstract

Purpose The objective of this paper is to examine the information regarding intellectual capital disclosed to financial analysts and to study if this data is finally considered in their decision‐making process. Design/methodology/approach The database consists of 257 reports of presentations held by Spanish companies and 217 analyst reports issued during 2000 and 2001. The paper shows that information related to intellectual capital is widely reported to financial analysts and that they use it in their decision making process. Findings The findings show that some of the items most frequently disclosed in the meetings and considered in valuation tasks are related to coherence and credibility of strategy, alliances, or leadership. Nevertheless, the comparison shows that the disclosure on intangibles is higher than the level of this information included in the analyst reports. This paper contributes to three streams of literature. The first is the literature on intangible assets, to which we contribute by providing evidence of its disclosure through direct contacts. The second is the literature on analyst valuation, to which we contribute by increasing understanding of the role of intellectual capital in the decision‐making process of financial analysts. Finally, by comparing the results, we test the differences in the focus on intangibles between the main parties involved in the information flow: the discloser and the user of the information. Originality/value The analysis of non‐financial information currently reported in private channels and used by financial analysis may be of interest to policymakers or regulators in the setting of mandatory disclosure requirements regarding intangibles

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References

1991Disclosure, Liquidity, and the Cost of Capital 1997Disclosure level and the cost of equity capital.1997The New Organizational Wealth: Managing and Measuring Knowledge-Based Assets 2000The Economic Consequences of Increased Disclosure 1999The Economic Consequences of Increased Disclosure 1999The Boundaries of Financial Reporting and How to Extend Them 1999Stock Performance and Intermediation Changes Surrounding Sustained Increases in Disclosure*2001Intangibles: Management, Measurement, and Reporting

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2012IC disclosures in IPO prospectuses: evidence from Malaysia 2020Does intellectual capital disclosure affect the cost of equity capital? An empirical analysis in the integrated reporting context 2011Voluntary disclosures of intellectual capital 2008An explanation of human capital disclosure from the resource‐based perspective 2010Determinants of sell‐side financial analysts’ use of non‐financial information 2017

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