IC disclosures in IPO prospectuses: evidence from Malaysia

Abstract

PurposeThis study aims to investigate the factors influencing the disclosure of intellectual capital (IC) information in the Malaysian initial public offering (IPO) prospectus using multiple regression analysis.Design/methodology/approachThe sample consists of 130 companies in the technology and industrial products sectors of Bursa Malaysia that went through an IPO between 2004 and 2008. Initially, the extent of the IC disclosure index is quantified using content analysis methodology. The multiple regression analysis is then used to examine the associations of nine potential explanatory variables with IC disclosure level.FindingsIn general, the results provide evidence that board size, board independence, age, leverage, underwriter and listing board significantly influence the extent of IC disclosure in an IPO prospectus. Nonetheless, the effect of each explanatory variable may vary in each estimated parameter of the multiple regression models. Three variables, board diversity, size and auditor, were not significant.Originality/valueAlthough many studies have examined the content of and reasons for IC disclosures, this study provides empirical evidence in this specific area, i.e. to explore the determinants of IC disclosure, particularly from the perspective of IPO prospectuses, in emerging countries such as Malaysia.

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

“…In prior researches, results concerning the impact of the firm"s age on voluntary ICD are inconsistent. Researches like Li et al (2008), Rimmel et al (2009) and Rashid et al (2012) found a negative association. In the research of White et al (2007), was found a positive relationship.…”

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

“…Leverage does not significantly affect ICD as a whole. The result is in line with Ferreira et al (2012), Ousama et al (2012) , andMuttakin et al (2015) but is conflicting with Rashid et al (2012), Oliveira et al (2013), and Kamardin et al (2017) who find that leverage has insignificant effect of ICD. The insignificant effect of leverage on ICD may be caused by the lack of demand from creditors to disclose firm's non-financial information, especially regarding ICD; since for debitors, firm's capability to service its debts is the most important.…”

“…Meanwhile, Atan & Rahim (2012) do not find any significant relationship between profitability and ICD. Likewise, different results are present between the studies by Rashid et al (2012), Oliveira et al (2013), Haji & Ghazali (2013), and Whiting & Woodcock's research which finds that leverage is not significantly related with ICD. Other than using size, market share, profitability, and leverage as variables, this study also tries to measure the role of information asymmetry in IC disclosure, as done by Bruggen et al (2009) and Orens et al (2009).…”

“…Firms would want to assure external parties that firm value does not rely only on financial performance, but also other factors like intellectual capital. Rashid et al (2012), Oliveira et al (2013), and Kamardin et al (2017) examine the relationship between leverage and ICD and find them to have a significant relationship. The following hypotheses were made:…”

Intellectual capital performance of Sharia banks: Evidence from Indonesia

“…Based on the phenomenon of practice and literature review of previous research it is known that IC is a very important resource for value creation and competitive advantage for the company in mod-ern business especially in the era of digital banking as it is today. Nevertheless, accounting standards (both in Indonesia and internationally) have not been able to provide guidelines for accurately recognizing and measuring IC, resulting in IC not being included in financial statements (Rashid et al, 2012;Widarjo & Bandi, 2018).…”