Intellectual capital reporting in a mandatory management report: the case of Germany
| Pages | 702-720 |
| Date | 12 October 2015 |
| Published date | 12 October 2015 |
| DOI | https://doi.org/10.1108/JIC-02-2015-0011 |
| Author | Viktoria Goebel |
| Subject Matter | Information & knowledge management,Knowledge management |
Intellectual capital reporting in a
mandatory management report:
the case of Germany
Viktoria Goebel
University of Edinburgh Business School, University of Edinburgh,
Edinburgh, UK
Abstract
Purpose –The purpose of this paper is to investigate the relationships of company characteristics to
intellectual capital (IC) reporting in a mandatory management report. Based on the relevant regulation
in Germany, IC components of the mandatory management report can be characterised as being
partially required, partially recommended and partially voluntary.
Design/methodology/approach –A content analysis of 428 group management reports of listed
German companies was conducted for required, recommended and voluntary IC reporting. To
investigate the relationship of certain company characteristics to IC reporting, this study conducted a
regression analysis considering company returns, size and industry.
Findings –The findings show that structural capital dominates total IC reporting in Germany.
This observation is in contrast to prior literature, in which relational capital has been found to
be most frequently reported. However within the sub-group of voluntary IC reporting in German
companies, relational capital has the highest proportion. The regression results show that company
returns show no effect on IC reporting, but size and industry group are significantly related to
IC reporting.
Research limitations/implications –The findings indicate that IC reporting requirements
and the relatively stringent German regulatory recommendations influence corporate IC reporting
behaviour. The findings provide a basis for further discussion by standard setters regarding the
extent to which requirements and recommendations on individual IC components seem to encourage
IC reporting.
Originality/value –This study utilises the unique research setting in Germany with a mandated
management report to distinguish between required, recommended and voluntary IC reporting.
Keywords Regulation, Recommendations, Management report, Mandatory, Requirements,
Voluntary reporting
Paper type Research paper
1. Introduction
The aim of this study is to investigate the relationship between intellectual capital (IC)
reporting and certain company characteristics in a mandatory management report in
Germany, regulated by the German Accounting Standard GAS 15 (GASC, 2010a). This
standard is part of the German reporting regulation for listed companies with limited
liability and requires additional narrative information on corporate performance. The
study analyses what information in GAS 15 can be characterised as IC reporting, how
listed German companies report on their IC with regard to required, recommended and
voluntary IC components, given certain company characteristics. In a previous German
study, a working group on “Accounting and Reporting of Intangible Assets”called for
Journal of Intellectual Capital
Vol. 16 No. 4, 2015
pp. 702-720
©Emerald Group Publishing Limited
1469-1930
DOI 10.1108/JIC-02-2015-0011
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1469-1930.htm
The author would like to thank the participants of BAFA Doctoral Colloquium 2012 and FRBC
Conference 2013 for their useful feedback. Furthermore, helpful comments on earlier drafts of this
paper by Professor Pauline Weetman are gratefully acknowledged.
702
JIC
16,4
IC reporting, particularly in management reports (Arbeitskreis Immaterielle Werte im
Rechnungswesen, 2005). However, the IC reporting literature has not investigated IC
reporting in Germany, in the context of management reporting regulations.
This study contributes to the IC reporting literature through the unique research
setting in Germany with IC reporting requirements and recommendations. The
findings of this study may provide a basis for further discussions on approaches
to IC reporting guidelines and recommendations. First, the standard GAS 15 is
analysed to distinguish required from recommended and voluntary IC components.
Second, this study conducts a content analysis and a regression analysis of IC
reporting in consolidated management reports of 428 listed German companies,
a large sample in comparison with prior studies. The content analysis in this study
uses software-aided coding. The characteristics of the German language facilitate
software-aided coding because of the structure of German compound words.
Consequently, the German context of this study contributes in two ways. The
research setting facilitates an analysis of required, recommended and voluntary
elements of IC reporting in a large sample. Furthermore, this study adds insights to IC
reporting by listed German companies by means of a content analysis and a regression
analysis by reporting types, something that has not been previously investigated .
IC is seen to support competitive advantages and represents a main proportion
of company value represented in excess market values compared to book values
(e.g. Hall, 1993; Brooking, 1996; Edvinsson and Malone, 1997; Stewart, 1997; Sveiby,
1997). This is partly due to the criticised diminishing informativeness of the balance
sheet regarding intangible resources (Lev and Zarowin, 1999; Zéghal and Ma aloul,
2011), consequently lacking meaningful information on IC. For this important form
of capital, IC reporting is a central communication platform (e.g. Mouritsen et al., 2001).
Therefore, this study investigates whether reporting regulations can support reportin g
on corporate IC as a way of informing the market about the degree to which this form of
capital represents an important part of company value.
This study is structured as follows. Section 2 reviews the literature on IC,
summarising the international development of IC reporting guidelines and outlining
country-specific issues for IC reporting in Germany. In Section 3, the German
management reporting regulation is described and analysed for IC components. The
research design is outlined in Section 4. Section 5 presents the results of the content
analysis and the regression analysis for IC reporting by required, recommended and
voluntary IC reporting. Section 6 concludes the study.
2. Literature review
2.1 Research on IC reporting
IC reporting has been the subject of research for more than 15 years, as reviewed by
Dumay (2014) or Guthrie et al. (2012). A remarkable number of IC reporting studies
exist, focusing on voluntary IC reporting in various research settings, as discussed by
Beattie and Thomson (2007) or Dumay and Cai (2014). However, many exploratory
studies approaching IC reporting in content analyses use relatively small samples of
the largest companies listed on the respective stock exchanges (e.g. Guthrie and Petty,
2000; Brennan, 2001; Bozzolan et al., 2003; Abeysekera and Guthrie, 2005; Vergauwen
et al., 2007; Striukova et al., 2008; Li et al., 2012). Larger samples may provide richer
data for IC reporting investigations, as advocated by Lee and Guthrie (2010) with
software-aided coding as feasible tool (Bontis, 2003; Lee and Guthrie, 2010).
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IC reporting in
a mandatory
management
report
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