Influence of Intellectual Capital Investment, Risk, Industry Membership and Corporate Governance Mechanisms on the Voluntary Disclosure of Intellectual Capital by UK Listed Companies

Abstract

This research examines the cross-sectional effect of intellectual capital investment, financial measures of market and company specific risk, industry membership and corporate governance on the extent of voluntary disclosure of intellectual capital (VDIC) in a sample of 443 FTSE All Share Index company annual reports for the year 2003/2004. The extent of disclosure is measured by a disclosure index (DI) based on intellectual capital (IC) attributes included in the narratives and illustrations of the annual reports. The research predicts that agency costs are mitigated by VDIC and that the benefits of signalling IC may outweigh competitive and proprietary costs that may be more prevalent in innovative and technological companies; furthermore, that effective corporate governance measures enhance VDIC particularly in those companies found to have a higher level of intangible assets (IA) in their resource base. The results suggest that companies associated with less financial risk, reduced debt, higher levels of liquidity and accompanied by growth are characterised with higher levels of VDIC. Although less significant, the results on market risk indicate a positive influence on VDIC. Furthermore, the extent of VDIC in annual reports is enhanced when large companies operating in high-tech and innovative industries are characterised by investments in employees; in contrast, companies associated with research and development processes tend to be more secretive with respect to VDIC. The results suggest that companies that are able to maintain adequate governance systems through segregation of executive and non-executive duties and to a less extent through the presence of experienced non-executive directors exhibit higher levels of disclosure.

Board of directors' characteristics and corporate risk disclosure: the moderating role of family ownership

“…The current study hopefully adds many novel theoretical contributions to the existing literature on accounting and financial reporting. First, the available literature points outs that studies on risk disclosure have focused mainly on the developed countries (Lajili, 2009;Linsley and Shrives, 2006;Macchioni et al, 2014;Mkumbuzi, 2016). Hence, the results may not be applicable to emerging markets because many economic differences exist between the developing and developed countries (Nahar et al, 2016).…”

The Financial Determinants of Integrated Reporting Disclosure by Jordanian Companies

“…The liquidity ratio is one of the financial indicators that show the company's ability to pay its short-term obligations. The higher the liquidity ratio, the greater its ability to fulfil its obligations (Mkumbuzi 2016). It provides an essential index for shareholders to assess the status of companies (Rashid 2018;Modugu 2020).…”

“…Moreover, the availability of high liquidity indicates a better company's financial performance (Haninun et al 2018). This may provide an incentive for companies to provide more information on non-financial performance to satisfy more stakeholders (Mkumbuzi 2016).…”

Управленческий Инструментарий Инвестирования В Интеллектуальный Капитал Промышленного Предприятия

“…Со стратегической точки зрения информация об интеллектуальном капитале, которую получают менеджеры при применении современных инструментов управления, поддерживает повышение качества управленческих инвестиционных решений [73], [74]. С одной стороны, инвестиции в интеллектуальный капитал повышают результативность и эффективность работы компании [65], с другой стороны, создание новых инвестиционных ресурсов повышает ее инвестиционную привлекательность [75], [76].…”