Social media networks as drivers for intellectual capital disclosure. Evidence from professional football clubs
| DOI | https://doi.org/10.1108/JIC-09-2016-0093 |
| Date | 09 January 2017 |
| Pages | 63-80 |
| Published date | 09 January 2017 |
| Author | Alessandra Lardo,John Dumay,Raffaele Trequattrini,Giuseppe Russo |
| Subject Matter | Information & knowledge management,Knowledge management,HR & organizational behaviour,Organizational structure/dynamics,Accounting & Finance,Accounting/accountancy,Behavioural accounting |
Social media networks as drivers
for intellectual capital disclosure
Evidence from professional football clubs
Alessandra Lardo
Department of Economics and Law, University of Cassino and Southern Lazio,
Cassino, Italy
John Dumay
Department of Accounting and Corporate Governance, Macquarie University,
Sydney, Australia, and
Raffaele Trequattrini and Giuseppe Russo
Department of Economics and Law, University of Cassino and Southern Lazio,
Cassino, Italy
Abstract
Purpose –The purpose of this paper is to investigate the relationship between popularity in a social media
network and a company’s revenue, expenditure and market value. Additionally, social media networks are
analysed as tools for both voluntary and involuntary intellectual capital (IC) disclosure.
Design/methodology/approach –These aims are analysed in the context of the football industry.
An empirical analysis evaluates the correlations between team and player social media metrics from
Facebook, Twitter, Google Plus, Instagram and their football club’s market value, revenue and player transfer
fees. Examples of timely IC disclosure are also reported.
Findings –The results indicate that popularity metrics in social media are determinants of the value of
human and relational capital in professional football clubs. Popularity in social media positively correlates to
market capitalisation, revenue and player transfer fees. Additionally, examples are provided to show how
social media can be a tool for disclosing IC information in a relevant and timely manner.
Practical implications –From a strategic management perspective, the authors find that there are
economic opportunities to be gained from managing social media platforms appropriately and that
knowledge derived from social media needs to be used effectively by club managers, so that fans and
followers can be transformed into consumers. One practical implication of this research is the need to hire
social media experts that are able to develop, coordinate and manage digital communication strategies.
Originality/value –This paper presentsan analysis of emerging changesin technology and communication
platforms and different types of disclosure.It aims to demonstrate that the metrics derivedfrom social media
can be used as toolto disclose voluntary and involuntaryinformation about IC –informationthat is particularly
useful to investorsbecause their shortage of tangible assets can make football clubsdifficult to evaluate.
Keywords Social media, Intellectual capital disclosure, Involuntary disclosure, Voluntary disclosure,
Social media metrics, Football clubs
Paper type Research paper
1. Introduction
In this paper, the authors look at how social media metrics act as tools for voluntary and
involuntary intellectual capital (IC) disclosures (Dumay and Guthrie, 2017). Against the
backdrop of changes in communications technology and a growing awareness of the
importance of intellectual assets, the authors examine whether the social media profiles of
companies and their employees on four social medianetwork platforms –Facebook, Twitter,
Google Plus and Instagram –provide insight information about a company’s IC that is both
pertinent and timely for revealing information about relational and human capital.
It is clear that the passive one-directional flow of information from companies to their
stakeholders can be replaced with new communication tools that provide a virtually
countless number of interactive two-way exchanges. This information can be either
Journal of Intellectual Capital
Vol. 18 No. 1, 2017
pp. 63-80
© Emerald PublishingLimited
1469-1930
DOI 10.1108/JIC-09-2016-0093
Received 24 September 2016
Revised 6 October 2016
Accepted 6 October 2016
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1469-1930.htm
63
Social media
networks
mandatory, voluntary or involuntary. In this research, we are particularly concerned with
the voluntary and involuntary disclosure of information. More specifically, we are
interested in the role of social media as tool for disclosing financial and non-financial
information, and how forms of disclosure beyond annual reports and IC statements can be
used by knowledge-based companies. In this context, we use the football industry,
specifically European football clubs listed on the stock exchange and the player transfers
between these clubs.
Using both qualitative and quantitative analyses, we demonstrate a positive relationship
between popularity in social media and the value of a club’s IC in terms of market value,
human capital and relational capital. The authors aim to show that the metrics derived from
social media networks can reveal IC information both voluntarily and involuntarily.
Information of this kind is normally difficult to evaluate since it does not concern tangible
assets, but is arguably important to football club investors.
The paper is structured as follows. Following the introduction, Section 2 contains an
analysis of existing literature on IC disclosure. The context of the research is introduced in
Section 3 and Section 4 contains the methodology. Research findings are set out in Section 5,
with the discussion and conclusion in Section 6.
2. Literature review: IC disclosure
The purpose of this section is to outline the research that examines the relationship between
IC disclosure and share prices. Over two decades ago, companies began to consider the
relationship between intangible assets, such as human and relational capital and market
value. The pioneering research was conducted at Skandia in Sweden (Edvinsson, 1997), and
since then disclosing information on intangible assets and IC (Stewart, 1997) has
increasingly become an integral part of a company’s value creation process from a market
perspective (Petty and Guthrie, 2000; Sullivan, 2000; Williams, 2001; Dumay, 2008). This led
to research based on a grand theory that disclosing IC leads to greater profitability (Dumay,
2012; Llewelyn, 2003). The theory states that IC disclosure is important to investors because
it improves their decision making, and is important to management and boards because it
helps to discipline them with the reward of positive economic consequences (Zarowin and
Lev, 1999; Andriessen, 2004). As Bismuth and Tojo (2008) argue, “ensuring that the non-
financial information is consistent, comparable over time and across companies, material
and reliable would allow investors to better assess future earnings and the risks associated
with different investment opportunities, thus reducing information asymmetry”. However,
as we explore further, we find divergent views as to whether overall or specific IC
disclosures affect share prices and thus we investigate other mechanisms for IC disclosure.
2.1 Types of disclosure studies and their affects
In accounting, there are two types of studies in capital market-based research –information
and event studies (Rankin et al., 2012). This is reflected in IC as market-based information
studies which typically use content analysis to determine the extent of the IC data, and then
use market data to understand the relationships between market capitalisation, other
factors and IC disclosures (Gerpott et al., 2008; Maditinos et al., 2011). Within these market-
based studies, Bellora and Guenther (2013) identify two streams. The first stream examines
the annual reports of listed companies that disclose IC in its various categories (Guthrie
et al., 1999; Brennan, 2001; Bontis, 2003; Bozzolan et al., 2003; Guthrie et al., 2006). Such
studies concentrate on the content, variables and consequences of IC disclosures over time
(Abdolmohammadi, 2005; Ghosh and Wu, 2007; Mavridis, 2005). The second stream
investigates the impact of a specific IC category on financial performance, for example,
human capital, again through annual reports (Abeysekera and Guthrie, 2004; Olsson, 2001;
Subbarao and Zé
ghal, 1997). Studies that use annual reports dominate market-based IC
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