Intellectual capital disclosure : a longitudinal study of New Zealand companies

Abstract

Intellectual capital is increasingly being recognised as an important component of organisational value. Thus, intellectual capital information is vital for decision making both within the organisation and for external stakeholders. Limited longitudinal intellectual capital disclosure research has been undertaken, particularly with New Zealand companies. Consequently little is known about the intellectual capital disclosure of New Zealand companies and the changes in intellectual capital disclosure over time. This dissertation attempts to address this gap. The purpose of this research is to examine patterns in how and to what extent New Zealand organisations are disclosing intellectual capital information within the annual report. The hidden value method was used to categorise organisations as knowledge intensive or traditional product based. Content analysis was then undertaken on the annual reports of five knowledge intensive and five traditional product based New Zealand listed companies for 2004, 2007 and 2010. The longitudinal research found that although there was a slight increase in voluntary intellectual capital disclosure from 2004 - 2010, there was no increasing trend over the three time periods. The findings also show no relationship between the type of organisation and the level of voluntary intellectual capital disclosure. Further, this research found that 89% of voluntary intellectual capital disclosures were in discursive form and only 2.4% of disclosures conveyed negative news. The longitudinal perspective of intellectual capital disclosure within New Zealand organisations taken by this dissertation contributes to the voluntary intellectual capital disclosure literature and may assist accounting bodies in the future development of intellectual capital disclosure guidelines. This dissertation should also assist accounting standard setters in assessing trends in the type of intellectual capital information being disclosed, the differences between knowledge intensive and traditional product based organisations, the way in which the information is being reported and whether it is predominantly positive or negative news.