Intellectual capital: Australian annual reporting practices
| Date | 01 September 2000 |
| Pages | 241-251 |
| DOI | https://doi.org/10.1108/14691930010350800 |
| Published date | 01 September 2000 |
| Author | James Guthrie,Richard Petty |
| Subject Matter | Accounting & finance,HR & organizational behaviour,Information & knowledge management |
Annual
reporting
practices
241
Journal of Intellectual Capital,
Vol. 1 No. 3, 2000, pp. 241-251.
#MCB University Press, 1469-1930
Intellectual capital: Australian
annual reporting practices
James Guthrie
Macquarie Graduate School of Management,
Sydney, Australia, and
Richard Petty
The University of Hong Kong, Hong Kong
Keywords Intellectual capital, Company reports, Intangible assets, Europe, Australia
Abstract This study reports the results of an empirical examination of Australian annual
reporting of intellectual capital. The findings suggest that the development of a model for
reporting intangibles is piecemeal and not widely spread. The outcomes of our exploratory
investigation are threefold. First, the key components of intellectual capital are poorly understood,
inadequately identified, inefficiently managed, and not reported within a consistent framework
when reported at all. Second, the main areas of intellectual capital reporting focus on human
resources; technology and intellectual property rights; and organisational and workplace
structure. Third, even in an Australian enterprise thought of as ``best practice'' in this regard,
a comprehensive management framework for intellectual capital is yet to be developed, especially
for collecting and reporting intellectual capital formation. In conclusion, Australian companies do
not compare favourably with several European firms in their ability to measure and report their
intellectual capital in the annual report.
Introduction
This study examines the proposition that knowledge management is an
important strategy to large companies and that this will be reflected by way of
disclosure of intellectual capital items in the firm's annual report. Supporting
this expectation is considerable evidence, in particular from Europe, of the
genesis of reporting frameworks that demonstrate a previously unseen level of
public disclosure with respect to the intangible assets of firms (Organisation for
Economic Co-operation and Development, 2000). In the light of these changes to
disclosure, and the pressure such changes have imposed to bring about a
review of reporting standards generally, we aim via content analysis methods
to establish a better understanding of how Australian firms have responded to
the challenge of reporting on intellectual capital.
The growing importance of knowledge management intellectual
capital
Most first-world nations have experienced a shift in their source of gross
domestic product (GDP) away from traditional commodities and
manufacturing based sectors towards a broader concept of economic value
creation that encompasses service items and intangible-based output (Petty
and Guthrie, 2000a; 2000b; Tissen, 1998). In Australia, this transformation
has been more pronounced than in most other countries (Guthrie and Petty,
2000). Australia's economy has traditionally rested on the commodity and
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