The Role of Firm Characteristics in Voluntary Disclosure of IC Information and Its Importance for High-Tech Companies

Abstract

The purpose of this paper is to analyse whether the extent and quality of voluntarily disclosed information regarding intellectual capital (IC) are correlated with certain characteristics of a company. IC is very important for IT companies. Therefore, financial and non-financial statements of 32 high-tech companies were investigated using the content analysis method. To test the influence of firm characteristics on the intellectual capital disclosure index (ICDI), the regression model was used. The size of the firm was the only independent variable that has had a statistically significant influence on the ICDI. The auditor type, as well as financial ratios, have not shown a statistically significant influence on the extent and quality of IC disclosures. This study reflects the state regarding the voluntary IC disclosures in Croatia and therefore the study may be a roadmap for further research and, more importantly, might promote awareness of the importance of transparent reporting.Generally, intangibles, IAs, and IC are often used interchangeably with the same general meaning. There are various definitions of IC which exist in literature. Edvinsson, Malone and Brooking, the pioneers when it comes to IC, have a similar but a bit different view on the IC components. According to Brooking, IC divides into human-centered assets, infrastructure assets, intellectual property assets, and market assets, while Edvinsson and Malone have divided IC into human capital, structural capital (organizational, process, and innovation capital), and customer capital [1]. Sullivan [2] has summarized the several definitions of IC, as defined by the pioneers into the field of knowledge creation: "Hubert Saint-Onge defines knowledge capital as the sum of human capital (the capabilities of the individuals required to provide solutions to customers); customer capital (the depth, width, attachment, and profitability of the franchise); and structural capital (the organizational capabilities of the organization to meet market requirements); Leif Edvinson of Skandia defines it as "the sum of the firm's human and structural capital."; and Tom Stewart of Fortune magazine defines IC as "the intangible assets of skill, knowledge, and information." As defined by Larry Prusak, IC is "intellectual material that has been formalized, captured, and leveraged to produce higher-valued assets [3]." Bounfour and Edvinson [4] state that "at the corporate level, intangible investments (research and development or R&D, innovation, knowledge creation and fertilization, marketing and advertising expenditures) are now unanimously considered the most important sources of performance." "The intellectual capital (IC) held by a firm can be thought of as a form of 'unaccounted capital' within the traditional accounting system… described as the knowledge-based equity that supports the knowledge-based assets of a firm [5]." According to the words of Choo and Bontis [6] "as long as the economic forces embrace new knowledge-intensive industries, the field of intellectual...

Firm characteristics and Biological Asset Disclosure on Agricultural Firms

“…However, this research is aligned with the research of [5], [45], [60] which concludes that leverage does not give a significant effect to the intangible asset disclosure. This research also supports [65], [82] which proves that there is no effect between leverage and intellectual capital disclosure. This research results show that the amount of leverage is not influencing the amount of disclosed information regarding the biological asset by an agriculture firm.…”

“…Related with intellectual capital disclosure, research [11], [32] finds a positive relationship between leverage and intellectual capital disclosure. On the other hand, research [65], [82] proves that there is no influence between leverage and intellectual capital disclosure. H1: Leverage gives a positive influence on the biological asset disclosure According to PSAK 69, an entity must disclose the combined profits and losses between the ongoing period on the initial recognition of a biological asset and agriculture product and from the change of fair value minus the cost to sell the biological asset (paragraph 40) and profits or loss that occurs from the changes of fair value minus the selling cost (50a).…”

“…Research [27] concludes that a firm's size gives a positive influence on the intangible asset disclosure level. Research [65] also finds a positive relationship between a firm's size with intellectual capital disclosure. Research [28], [37], [38], and [83] finds that there is a positive correlation between a firm's size with biological asset disclosure.…”

“…Research [65] also finds that liquidity does not influence intellectual capital disclosure. This research tries to link liquidity with biological asset disclosure by formulating the following hypothesis: H3: Liquidity gives a positive influence on the biological asset disclosure.…”

“…Research [8], [60], finds that profitability is not influencing the intangible asset disclosure. Research [55] and [65] finds that there is no correlation between profitability and intellectual capital disclosure. Specifically, if it is aligned with biological asset disclosure, [28], and [37] shows that profitability does not influence biological asset disclosure.…”