Bridging the gap between disclosure and use of intellectual capital information
| DOI | https://doi.org/10.1108/14691930510611157 |
| Published date | 01 September 2005 |
| Pages | 427-440 |
| Date | 01 September 2005 |
| Author | Emma García‐Meca |
| Subject Matter | Accounting & finance,HR & organizational behaviour,Information & knowledge management |
Bridging the gap between
disclosure and use of intellectual
capital information
Emma Garcı
´a-Meca
Department of Accounting and Finance, University of Murcia, Murcia, Spain
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
Keywords Financial analysis,Disclosure, Intangible assets,Intellectual capital
Paper type Research paper
Introduction
Increasing competition, new business sectors and technological developments have led
to the decreasing relevance of financial statements and the increasing relevance of
narrative reporting (Lev and Zarowin, 1999; Breton and Taffler, 2001). The capital
market is requesting more reliable information regarding knowledge resources in a
company, such as risk factors, strategic direction, managerial qualities, innovatory
skills, experience, and integrity. These variables are the key drivers of value creation
The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at
www.emeraldinsight.com/researchregister www.emeraldinsight.com/1469-1930.htm
This paper has benefited from the helpful comments of the participants at the III Empirical
Accounting Workshop in Alicante, the XXVI EIASM Doctoral Colloquium of the European
Accounting Association, the XXVI European Accounting Congress in Sevilla, and the I
International Conference on Intangibles in Madrid. I have also benefited from comments by
participants at several seminars at the Aarhus School of Business. Funding from Morgan
Stanley as well as SEC2000-014 is gratefully acknowledged.
Bridging the gap
427
Journal of Intellectual Capital
Vol. 6 No. 3, 2005
pp. 427-440
qEmerald Group Publishing Limited
1469-1930
DOI 10.1108/14691930510611157
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