Intellectual capital disclosuretrends: Singapore and Sri Lanka

Indra AbeysekeraSchool of Accounting and Finance, University of Wollongong,

Wollongong, Australia

Abstract

Purpose – The purpose of this paper is to investigate the intellectual capital (IC) disclosure trendsand disclosure category differences of top 20 listed firms in a developing nation, Sri Lanka, andmoderately developed nation, Singapore. The paper aims to highlight the differences in IC disclosurepractice between developing and developed nations.

Design/methodology/approach – The study investigates the top 20 firms by market capitalizationlisted on the Colombo stock exchange in 1998-2000. Using the content analysis method, it reviews theannual reports of these firms to determine IC disclosure trends in Sri Lanka. It then compares thesefindings with a similar unpublished study undertaken in Singapore during the same period.

Findings – The study identified IC disclosure differences between Sri Lankan and Singaporefirms, and suggest reasons for differences from country perspectives. The paper highlights the needfor a uniform methodology in intellectual disclosure framework to establish consistent disclosurepractices.

Practical implications – This study highlights the need to establish a uniform methodology forfinancial disclosure under International Financial Reporting Standards that can mobilize globallyuniform disclosure IC disclosure practices.

Originality/value – This study offers insights into comparative trends in IC disclosure practicesbetween a moderately developed and a developing country.

Keywords Intellectual capital, Singapore, Sri Lanka, Developing countries

Paper type Research paper

IntroductionThe paradigm shift from focusing on tangible assets to non-tangible assets notrecognized in financial statements to increase competitiveness of firms has challengedthe decision relevance of information provided by financial reporting system (Bontis,2000; Coy, 2001). The recent mega corporate collapses in several developed countries(e.g. Enron in the USA, HIH in Australia) has heightened the need to review provision ofrelevant information to investors (Clarke and Dean, 2007). In particular, it is pointed outseveral assets that enable firms to enhance competitiveness and future profitability arenot recognized in financial statements such as knowledge assets represented byemployees’ collective capabilities, information systems in firms are relevant informationfor investor decision making (Stewart, 2001; David Skyrme Associates, 1997).

Industry sectors making increasing contribution to national economies is anadditional factor that has heightened the need to make disclosure beyond disclosuremade through financial reporting systems. Many assets of firms in these industrysectors that are economic value creators are not recognized in financial statements(Canibano et al., 2000; Granof and Zeff, 2002; Stewart, 2001). The expansion oftechnology-based, communication, and industry sectors that heavily depend on humaninnovation and capabilities (such as research and development sector) are examples

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Journal of Intellectual CapitalVol. 9 No. 4, 2008

pp. 723-737q Emerald Group Publishing Limited

1469-1930DOI 10.1108/14691930810913249

(Bontis, 2000; Dzinkowski, 2000, 1998). The intellectual capital (IC) represents a subsetof such assets not recognised in financial statements.

The literature provides a number of definitions of IC (Stewart, 1997; Union Fenosa,1999; Martensson, 2000; Ordonez de Pablos, 2002) with IC as value creators of firms(Lynn, 1998). IC is “intellectual material that has been formalised, captured andleveraged to produce a higher-valued asset” (Australian Society of CPAs and TheSociety of Management Accountants of Canada – ASCPA and CMA, 1999, p. 4; TheSociety of Management Accountants of Canada, 1998, p. 3), and if successfullymanaged leading to future benefit that does not have a physical or financialembodiment (Bernhut, 2001).

The disclosure of IC becomes important to signal investors about affairs of firms inan intense globally competitive economic environment. IC can give rise to agencyproblems as “insiders” of firms can take advantage of such information to earn excessprofits (Thompson and Randall, 2000; Scott, 2000). Disclosure of IC in annual reportshelps to make capital markets more efficient by reducing information asymmetrybetween “insiders” and investors. Additionally, IC disclosure helps the capital marketto provide a more accurate market capitalization of firms (Guthrie et al., 1999).

Different factors, local and global, may intervene in determining IC disclosure offirms, and the level of economic development in a country, whether it is a developed,moderately developed, or developing country could be one of them. For instance, in1998, Singapore implemented a regulatory framework founded on a disclosurephilosophy to encourage greater disclosure by firms listed on Singapore stockexchange (Cheng et al., 2002). During the same period, Sri Lanka amended the longoverdue Code of Intellectual Property Act No. 52 1979 to help firms to build afoundation for a knowledge-based economy (Wickremaratne, 2000).

This paper contributes to understanding of IC disclosure practices by comparingfirms in a moderately developed country setting (Singapore) and developing countrysetting (Sri Lanka). This study uses annual reports of top 20 firms by marketcapitalization as source documents over three continuous years (1998-2000). Theempirical findings from Sri Lanka is compared with an unpublished project providesfindings for Singapore (Cheng et al., 2002).

This comparative study investigates two research questions. First, whether there isan increasing trend of IC disclosure across the three-year period. Second, whether thetypes and level of IC disclosure provide insights into the importance attached to ICcategories and items. In examining the two research questions, this paper is organizedinto following sections. Section 2 focuses on the conceptualisation of IC anddevelopment of hypotheses. Section 3 outlines the research design, samplingprocedures, data collection methods. Section 4 presents the analysis of findingsfollowed by discussion of the results. Section 5 offers concluding remarks, limitationsof study, implications for policy decisions, and suggestions for further research.

Literature review and hypotheses developmentDisclosure of ICWith competitive advantage and success in business during the 1990s primarily drivenby non-tangible assets such as IC, capital markets being increasingly interested in ICdisclosure. Grojer and Johanson (1999) suggest that IC disclosure should improvecapital market efficiency and contribute to better corporate governance.

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Firms have rated IC disclosure among the top ten information needs of investors(Shelley Taylor Associate, 1999) but presently accounting disclosure in annual reportsis more suited to disclose a firm’s physical capital. The deficiency in disclosure forinvestors decision making is a concern, and accounting regulators may need to re-thinkabout disclosure requirements to meet decision-making interests of investors. Researchcan contribute to this vacuum by undertaking longitudinal research to demonstrateimplications of IC disclosure over a continuum. Researchers have taken similarundertakings to investigate IC trends in Australia (Sujan and Abeysekera, 2007), SriLanka (Abeysekera and Guthrie, 2005), and IC trends between countries; Australia andSri Lanka (Abeysekera, 2007).

With the sparse longitudinal research studies on IC disclosure, the present studyseeks to expand prior research on IC disclosure practices by performing a longitudinalanalysis of IC disclosures in annual reports. The study investigates annual reportsdisclosure for each of the three years (1998-2000), of top 20 publicly listed firms bymarket capitalization listed on the Colombo Stock Exchange and comparing its resultswith counterpart firms in Singapore Stock Exchange from the unpublished study.Adopting a disclosure scoring system we measure the extent and quality of disclosureprovided in annual reports of sample firms as done in Singapore study. Thecomparison of findings between Singapore and Sri Lanka contributes to similaritiesand differences of IC disclosure in a global phenomenon context.

Conceptualisation of ICThe International Accounting Standards – IAS 38 has acknowledged the difficultyin quantitatively verifying IC processes for financial reporting purposes (IAS 38),which is the accounting standard of intangible assets, as a reason for not classifyingIC as assets in financial reports. As Catasus (2004) points out, the IAS 38 revisitedtraditional accounting classification-related concepts such as identifiability, controland future economic benefit. However, the effect of the use of traditional accountingstandards to produce a classification model whose financial statements providelimited information about the affairs of firms, and the prudent approach adopted byInternational Financial Reporting Standards (IFRS) has increased the “unexplained”gap between the fair price and the reported value (net book value) of the firm. Anasset meets the identifiability criterion when it meets one or the other of thefollowing two criteria:

(1) it is separable; that is, it is capable of being separated or divided from the entityand sold, transferred, licensed, rented or exchanged, either individually ortogether with a related contract, asset or liability; and

(2) it arises from contractual or other legal rights, regardless of whether thoserights are transferable or separable from the entity or from other rights andobligations (Picker and Hicks, 2003).

These changes to the IFRS to redefine recognition of intangibles have both financialreporting and taxation implications (Koch, 2003). Since stakeholders are not fullyaware of the gap between the fair and reported value of the firm (Lev, 1999; Lev andMintz, 1999), this increase in the “unexplained gap” may tend to support the function ofIC disclosure as bridging the “unexplained gap” so that stakeholders can make moreinformed economic decisions.

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IC categoriesIC has been categorised in several ways for analysis and interpretation (Organisationfor Economic Cooperation and Development – OECD, 2000; Abeysekera and Guthrie,2004). The recent literature, in general, delineates IC along three dimensions:

(1) “internal (structural) capital”;

(2) “external (relational/customer) capital”; and

(3) “human capital” (Brennan, 2001; Ordonez de Pablos, 2002; Bozzolan et al., 2003;Abeysekera and Guthrie, 2004, 2005).

Internal capital includes intellectual properties, processes, organisational culture, etc.whereas external capital represents the relationship with various stakeholders (Rooset al., 1997). External capital is the knowledge embedded in organisationalrelationships with customers, suppliers, investors, and strategic alliance partners(Bontis, 1998). External capital can be considered proprietary (e.g. brand, licenses andfavourable contracts) or non-proprietary (e.g. customer loyalty and businesscollaborations). “Proprietary” suggests that firm largely controlling the value of theasset and the enjoyment of benefits through ownership. “Non-proprietary” suggeststhat firm has no control but has some influence over such assets (Guthrie et al., 1999).Human capital is the set of assets contributed as employees including employees’education, skills, training, experiences and entrepreneurial spirit. They are usuallynon-proprietary to the firm but creates economic value and should be measured andreported on the balance sheet from a value-based perspective. In this paper, we classifyIC into three categories to understand the changes that have taken place from atheoretical perspective: internal, external and human capital and is the sameclassification used in Singapore study of IC disclosure practices.

Hypotheses developmentTrends in voluntary IC disclosure. Firms believe that IC is a key strategic resource thatdirectors should disclose regularly (Waterhouse and Svendsen, 1998). There is positiveexpectation that IC disclosure practices will intensify with the growing perceptionamong investors of firms (Abdolmohammadi et al., 1999) with firms perceiving ICdisclosure can improve performance of firms (Bontis, 2000).

IC disclosure can positively contribute to a firm in two ways. First, it can influencethe perception of investor value by disclosing growth prospects. Second, firms candisclose about effective governance of assets with economic worth but not recognizedin financial statements (David Skyrme Associates, 1997). If investors perceive ICdisclosure to be of value to investors, then we can expect an increasing trend of ICdisclosure as found by Williams (2000) with thirty UK-listed companies from 1996 to2000, which motivated our first hypothesis:

H1. Ceteris paribus, the level of IC disclosure is likely to increase over time in bothcountries.

Disclosure of IC categories. Table I summarizes IC variable by category in previousstudies. Most studies show that external capital is the most disclosed category with theexception of New Zealand (Steenkamp, 2007). Majority of them have been singlecountry studies, and have not contrasted their results with studies of other countriesthat adopted similar research methodologies. As demonstrated by previous studies,

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the disclosure levels have varied among the three categories, and notably they have notbeen investigated from a inter-country perspective. Table I summarizes the percentagedisclosure of each IC category in previous studies.

Based on these studies, which motivated our second hypothesis:

H2. There are differences in the level of reporting among the three categories of IC(external, internal and human) between the two countries in year 2000.

Research methodologySample selectionA sample consisting of top 20 listed companies for 1998, 1999 and 2000 year by marketcapitalization from Colombo Stock Exchange, and is comparable to Cheng et al. (2002)sample from the Singapore Exchange (SGX). This study used annual reports as sourcedocuments as they are most widely distributed and regularly produced documents(Campbell, 2000). Annual reports are a channel that a firm seeks to establish an imagein the public domain, and communicates with investors (Lang and Lundholm, 1993).

Content analysis designThe study employed content analysis since the aim this study is to assess the extent of ICdisclosure trends of listed firms by the amount (i.e. frequency count) and type(i.e. categories) of IC disclosure in annual reports. Content analysis research method in thisstudy codifies information into pre-defined categories to appraise patterns in IC disclosurethrough “systematic”, “objective” and “reliable” analysis (Abbott and Monsen, 1979, p. 504;Krippendorf, 1980). IC disclosure research confirms such analysis of annual reports to beempirically valid (Guthrie et al., 1999; Brennan, 2001; Bozzolan et al., 2003).

IC frameworkThe IC framework used in both Sri Lankan and Singapore study had three ICcategories. IC items are basic units of IC which are categorised into three major ICcategories (Brooking, 1996). However, IC items in the Sri Lankan study was moredetailed than that was used in Singapore study which replicated Guthrie and Petty

Study Country

Externalcapital

(per cent)

Internalcapital

(per cent)

Humancapital

(per cent)

Abeysekera and Guthrie (2005) Sri Lanka 44 20 36April et al. (2003) South Africa 40 30 30Bozzolan et al. (2003) Italy 49 30 21Brennan (2001) Ireland 40 30 30Citron et al. (2005) UK 60 26 14Goh and Lim (2004) Malaysia 41 37 22Guthrie et al. (1999) Australia 40 30 30Oliveira et al. (2006) Portugal 48 25 27Oliveras and Kasperskaya (2005) Spain 51 28 21Steenkamp (2007) New Zealand 36 11 53Sujan and Abeysekera (2007) Australia 48 31 21Vandamaele et al. (2005) The Netherlands,

Sweden and UK 40 30 30

Table I.Percentage disclosure of

IC variables by categories

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(2000) IC framework. The Sri Lankan study used ten items in internal capital (seven inSingapore study), ten items in external capital (eight in Singapore study), and 25 itemsin human capital (six in Singapore study) category. Owing to this reason, this studydoes not compare IC items between the two studies, but compares IC categories anddisclosure trends only.

Measure of IC disclosureThe content analysis of annual reports involved using a numerical coding schemewhen reading each annual report and recording information related to each attribute.For each firm, qualitative appearance of IC disclosure denoted 1; numerical (non-fiscal)appearance of IC disclosure denoted 2; and monetary (fiscal) IC disclosure denoted 3 asshown in Table II. The reporting unit was the frequency of appearance (frequencycount) of IC item pre-defined in the coding framework in annual reports, withabove-mentioned weightings attached to each disclosure based on previous studies(Guthrie and Petty, 2000; Sujan and Abeysekera, 2007).

As in previous studies, this study measured discretionary IC disclosure only(Guthrie and Petty, 2000; Brennan, 2001; April et al., 2003; Bozzolan et al., 2003). Bothstudies excluded IC disclosed to comply with accounting standards, law (CompaniesAct and Banking Act), and exchange listing requirements since mandatory disclosuredoes not indicate the level of management commitment towards IC disclosure.To include compulsorily disclosed IC in the analysis could obscure the desired focus onthe initiatives taken by firms in voluntary disclosure (Guthrie et al., 1999).

Singapore study had three coders and the inter-rater (coder), they overcame reliabilityproblem by having two coders rating the same IC disclosure item independently. Eachcoder would read all annual reports and record information pertaining to two of threemajor IC categories on a coding sheet. A second independent coder would do likewise incoding of each IC item. Where there might be grey areas in the classification process oridentification of IC that could lead to inconsistencies by any two coders when coding thefirst ten annual reports, all three coders clarified these doubts via discussions. Eachcoder then proceeded to carry out the coding independently. This initial exercise enabledcoders to develop a reliable coding outcome. The Sri Lankan study undertook similarapproach but to establish inter-rater (coder) reliability with two coders only.

Data analysisTo compare with findings of this study with Singapore study, this study appliednon-parametric tests, as data did not conform to normality. The Friedman testcompared three years samples for IC disclosure trends, as in H1. Additionally,Wilcoxon-Signed ranks test compared each year’s data with every other year forchanges in IC disclosure. The Kruskal-Wallis test ranked IC disclosure in 2000 year todetermine differences in IC disclosure by category, as in H2. The next section presentsthe results and discussion of the statistical tests.

Code/score Description

1 Item appeared in AR in narrative form2 Item was given a numerical value in the AR3 Item was given a monetary value in the AR

Table II.Three-way numericalcoding system

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Results and discussionResults of analysisThis study tested the hypotheses for statistical significance using the conventional5 per cent significance level.

Disclosure trend hypothesis (H1). Table III presents the Friedman test for H1 thatconfirms differences in the level of IC disclosure across the three-year period. Theresult for Singapore showed a significant increase in the level of IC disclosure for firmsfrom 1998 (mean rank 1.95) to 2000 (mean rank 2.10) at p-value of 0.000, thus providingsupport for H1. The result for Sri Lanka was not significant for overall IC disclosureproviding no support for H1.

The result for Sri Lanka showed an increasing trend for internal and external capital.However, human capital trend from 1999 to 2000 has decreased but not at significancelevel. The result for Sri Lanka showed an increase but the statistical significance appliesto internal capital disclosure category only, but Singapore study showed statisticalsignificance for both internal and human capital disclosure category.

Table IV shows results IC disclosure trends at the categorical level between years.Singapore showed a significant difference between 1999 and 2000, and 1998 and 2000,for all categories and overall IC. The result for Sri Lanka showed a statistical differencefor overall IC between 1998 and 2000 only.

Singapore study suggested the mandatory reporting of corporate governance, whichhas come into effect on 1 January 2003, encouraged firms to disclose the credentials,

Mean rankCategory 1998 1999 2000 p-value

SingaporeInternal 1.94 1.96 2.11 0.022 *

External 1.98 1.96 2.07 0.260Human 1.94 1.92 2.14 0.005 *

Overall 1.95 1.95 2.10 0.000 *

Sri LankaInternal 1.45 2.00 2.55 0.028 *

External 1.90 1.75 2.35 0.358Human 1.84 2.12 2.04 0.565Overall 1.77 2.01 2.22 0.076

Table III.Friedman test ofdifferences in IC

disclosure over athree-year period (n ¼ 60)

Internal External Human OverallComparison btw. years Z-value p-value Z-value p-value Z-value p-value Z-value p-value

Singapore1998 and 1999 20.745 0.457 20.848 0.397 20.014 0.989 20.215 0.8301999 and 2000 22.301 0.021 * 22.496 0.013 * 22.982 0.003 * 24.458 0.000 *

1998 and 2000 22.515 0.012 * 21.226 0.220 22.464 0.014 * 23.442 0.001 *

Sri Lanka1998 and 1999 21.680 0.093 20.533 0.594 20.887 0.375 21.603 0.1091999 and 2000 21.404 0.160 21.275 0.202 20.791 0.429 21.834 0.0671998 and 2000 21.305 0.192 21.304 0.192 21.294 0.196 22.275 0.023 *

Table IV.Wilcoxon-signed ranks

test for differences in ICdisclosure between two

years (n ¼ 20)

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expertise and educational levels of their directors. The human capital, one of the threecategories of IC, are pivotal to a firm’s success, disclosing educational qualifications ofemployees may signal to investors about high-calibre staff in their firms and superiorhiring policies (Cheng et al., 2002).

Although not at significance level (Table III), there was upward trend in ICdisclosure in Sri Lankan context but the reasons for increase was different from that ofSingapore. First, the global competition for capital requires firms to uphold investorconfidence by means of proactive IC disclosure to counter the negative effects ofsocio-political factors, such as the civil war in the country during the study period.Second, such an emphasis could help counter the negative impact of protective labourlegislation on investor confidence (McSheehy, 2001). Amendment of intellectualproperty act may have positively influence internal capital disclosure at significancelevel (Code of Intellectual Property Act No. 40, 2000).

IC categories hypothesis. When Kruskal-Wallis technique tested H2 in Singaporestudy and the results have shown a significant difference at p-value of 0.011 supportingH2, with human capital being the most disclosed as shown in Table V at significancelevel. However, Sri Lankan firms showed external capital as the most disclosedcategory but not at a significance level.

Using Mann-Whitney test, Singapore study reported differences at significancelevel between IC categories – internal and external, and internal and human capitalcategory as shown in Table VI. However, Sri Lankan study found no statisticalsignificance for differences between categories. In contrary to Singapore study, SriLankan study found differences between external and human capital at significancelevel which was not valid to Singapore study.

Given the shortage of land and natural resources in Singapore, human assets arecritical to Singapore’s economic success. The transformation into a knowledge-basedeconomy places even greater importance on human assets vis-a-vis other IC assets. Thisprobably explains the increase in human capital disclosure in 2000. Cheng et al. (2002)attribute the observed aberration in IC disclosure to the financial crisis underwent in1999 year, which adversely affected the earnings of many firms. Additional disclosurewould involve increased expenditures and this may have driven firms to omit IC as

Mean rankCategory Singapore Sri Lanka

Internal 187.17 23.30External 219.68 30.50Human 225.49 19.88p-value 0.011 * 0.096

Table V.Kruskal-Wallis test ofdifferences in ICdisclosure among the ICcategories for 2000(n ¼ 20)

Singapore Sri LankaNo. variable Z-value p-value Z-value p-value

1. Internal and external 22.360 0.018 * 21.323 0.1862. External and human 20.280 0.779 22.102 0.034 *

3. Internal and human 22.880 0.004 * 20.750 0.453

Table VI.Mann-Whitney test ondifferences between eachpair of categories (n ¼ 20)

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non-mandatory disclosure. Moreover, firms rather concentrated on restructuring effortsto strengthen their financial position (Cheng et al., 2002). The IC disclosure differencebetween external and human capital category at significance level may have been due tothe emphasis on external capital by Sri Lankan firms to counter the negative effects ofsocio-political factors (such as the civil war) and help counter the negative impact ofprotective labour legislation on investor confidence (McSheehy, 2001).

Concluding remarksImplications of findingsOne major observation from this comparative research is the challenge to the accountingprofession is to establish a consensus about a methodology for IC disclosure (Guthrie et al.,1999) that is consistent with IFRS in accounting. A consistent disclosure methodologyenables IC to compare across firms globally for investor resource allocation. Asdemonstrated in previous studies, Guthrie and Petty (2000) in Australia, Brennan (2001) inIreland, Olsson (2001, 1999) in Sweden, and Subbarao and Zeghal (1997) in their study ofseveral nations of human capital, have shown that the difference in fundamentalassumptions and frameworks between countries can result in different outcomes that arenot comparable between firms and nations. Though not ideal, a uniform methodologyrepresents a step in the right direction and once established open to refinement.

While it may be demanding on firms to impose mandatory IC disclosure, it would bemore advisable for the standard setters to employ mechanisms to motivate firms todisclose their IC. One such mechanism could be the prestigious Annual Report Award,jointly organized by the Institute of Certified Public Accountants of Singapore,Singapore Institute of Management and the SGX. The inclusion of IC disclosure as thecriteria for the assessment of the award will serve to motivate firms to increase theextent and quality of IC disclosure in their annual reports. This is especially true forfirms that make use of annual reports as the main reporting mechanism to establishtheir corporate image in the public sphere. The effectiveness of the award in improvingIC disclosure is already being demonstrated in Singapore (Cheng et al., 2002).

LimitationsThis comparative exploratory research has four limitations. Firstly, study has limitedexternal validity due to sample size of twenty listed firms only, and findings may notbe representative of firms in Singapore and Sri Lanka. Secondly, the study used year2000 annual reports only in testing of H2. Thirdly, the market capitalization was thebasis of selection of sample firms that used it as proxy for firm size. This study did notconsider the influence of industry specific factors in IC disclosure. For example,technology- and communication-based firms may disclose more IC as they rely more onnon-tangible assets in economic value creation, the mix of industry sectors in the twosamples may have influenced results. Fourth, this study investigated IC disclosurebetween IC categories for year 2000 only.

Suggestions for future researchAlthough exploratory in nature, this comparative study has provided much insight andadded to the debate of IC disclosure at a global level. The differences in IC disclosurebetween a developing country such as Sri Lanka and moderately developed countrysuch as Singapore, demonstrates similarities and differences, but they cannot entirely

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attribute to the stratification of developing country versus moderately developedcountry. Further research is hence necessary to make such definitive conclusions.

Additionally, there are four suggestions for future research. Firstly, an expandedsample size for comparative IC disclosure studies can provide more insights aboutIC disclosure practices. Secondly, extending the period of longitudinal analysis mayprovide an in-depth trend in IC disclosure. Thirdly, alternative disclosure media toannual reports (such as web sites) may provide corroborative evidence in investigatingIC disclosure practices. Fourth, IC disclosure studies have alluded to otherdeterminants such as industry type (Sujan and Abeysekera, 2007), leverage (Ahmedand Courtis, 1999) and listing status. Further IC disclosure research that includes thesevariables can enrich investigation of inter-country IC disclosure practices.

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Oliveras, E. and Kasperskaya, Y. (2005), “Reporting intellectual capital in Spain”, Economics andBusiness Working Papers Series 781, Departament d’Economia i Empresa, UniversitatPompeu Fabra, Barcelona.

Oliveira, L., Rodrigues, L.L. and Craig, R. (2006), “Firm-specific determinants of intangiblesreporting: evidence from the Portuguese stock market”, Journal of Human ResourceCosting & Accounting, Vol. 10 No. 1, pp. 11-33.

Olsson, B. (1999), “The construction of transparency through accounting on intellectual capital?”,Journal of Human Resource Costing & Accounting, Vol. 4 No. 1, pp. 7-10.

Olsson, B. (2001), “Annual reporting practices: information about human resources in corporateannual reports in major Swedish companies”, Journal of Human Resource Costing &Accounting, Vol. 6 No. 1, pp. 39-52.

Ordonez de Pablos, P. (2002), “Evidence of intellectual capital measurement from Asia, Europe,and the Middle East”, Journal of Intellectual Capital, Vol. 3 No. 3, pp. 287-302.

Picker, R. and Hicks, J. (2003), “Derecognition looms for intangibles”, In the Black, AustralianCPA, June, pp. 78-80.

Roos, J., Roos, G., Dragonetti, N.C. and Edvinsson, L. (1997), Intellectual Capital, Navigating theNew Business Landscape, Macmillan Business, London.

Scott, W.R. (2000), Financial Accounting Theory, 2nd ed., Prentice-Hall, Upper Saddle River, NJ,pp. 104-10.

Shelley Taylor Associate (1999), Full Disclosure 1998, Shelley Taylor, London.

(The) Society of Management Accountants of Canada (1998), The Management of IntellectualCapital: The Issues and the Practice, The Society of Management Accountants of Canada,Ontario, January, 1998.

Steenkamp, N. (2007), “Intellectual capital reporting in New Zealand: refining content analysis asa research method”, PhD thesis, Auckland University of Technology, Auckland(unpublished).

Stewart, T.A. (1997), Intellectual Capital: The NewWealth of Organisations, Doubleday/Currency,New York, NY.

Stewart, T.A. (2001), “Accounting gets radical”, Fortune, 16 April.

Subbarao, A.V. and Zeghal, D. (1997), “Human resources information disclosure in annualreports: an international comparison”, Journal of Human Resource Costing & Accounting,Vol. 2 No. 2, pp. 53-73.

Sujan, A. and Abeysekera, I. (2007), “Intellectual capital reporting practices of the top Australianfirms”, Australian Accounting Review, Vol. 17 No. 2, pp. 62-74.

Thompson, P. and Randall, B. (2000), “Accounting for intellectual capital: shaping the futurethrough the knowledge economy”, Singapore Accountant, March/April, pp. 32-9.

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Union Fenosa (1999), Annual Report 1998, Union Fenosa, Madrid.

Vandemaele, S.N., Vergauwen, P.G.M.C. and Smits, A.J. (2005), “Intellectual capital disclosure inThe Netherlands, Sweden and the UK: a longitudinal and comparative study”, Journal ofIntellectual Capital, Vol. 6 No. 3, pp. 417-26.

Waterhouse, J. and Svendsen, A. (1998), Strategic Performance Monitoring and Management,Canadian Institute of Chartered Accountants, Toronto.

Wickremaratne, K.T. (2000), “Intellectual property plays a vital role in the overall economicdevelopment of any country”, Ceylon Daily News, Lakehouse Publication, Colombo, 21 June.

Williams, S.M. (2000), Is a Company’s Intellectual Capital Performance and Intellectual CapitalDisclosure Practices Related? Evidence from Publicly Listed Companies from the FTSE 100,University of Calgary, Calgary, November.

Further reading

Andrews, B.H., Gul, F.A., Guthrie, J.E. and Teoh, H.Y. (1989), “A note on corporate socialdisclosure practices in developing countries: the case of Malaysia and Singapore”, BritishAccounting Review, Vol. 21 No. 4, pp. 371-6.

Ang, C.E., Teo, K.P. and Teo, K.S. (2000-2001), “Voluntary corporate governance disclosure:practices by companies listed on the Singapore Exchange”, Final Year Project, NanyangTechnological University, Singapore.

Arthur Andersen (1998), “Knowledge measurement”, Next Generation Research Group Paper,Arthur Andersen, Pittsburgh, PA, pp. 99-1029.

Birkett, W.P. (1995), “Managing accounting and knowledge management”, ManagementAccounting, November, pp. 44-8.

Boudreau, J. and Ramstad, P. (1997), “Measuring intellectual capital: learning from financialhistory”, Human Resource Management, Vol. 36 No. 3, pp. 343-56.

Brennan, N. and Connell, B. (2000), “Intellectual capital: current issues and policy implications”,Journal of Intellectual Capital, Vol. 1 No. 3, pp. 206-40.

Brinker, B. (1998), “Intellectual capital: tomorrow’s asset, today’s challenge”, White Paper, CPAVision, available at: www.cpavision.org/vision/wpaper05b.cfm

Chan, P.T., Lim, G.C. and Tan, C.Y. (1999-2000), “Empirical study of intellectual development inSingapore”, Final Year Project, Nanyang Technological University, Singapore.

Chee, K.K., Ong, K.H. and Tan, H.K. (1998-1999), “Intellectual capital and its increasingrelevance”, Final Year Project, Nanyang Technological University, Singapore.

Chow, C.W. and Wong-Boren, A. (1987), “Voluntary financial disclosure by Mexicancorporations”, The Accounting Review, Vol. 62 No. 3, pp. 533-41.

Cooke, T.E. (1989), “Voluntary corporate disclosure by Swedish companies”, Journal ofInternational Financial Management and Accounting, Vol. 1 No. 2, pp. 171-95.

Cooke, T.E. (1991), “An assessment of voluntary disclosure in the annual reports of Japanesecorporations”, The International Journal of Accounting, Vol. 26 No. 2, pp. 174-89.

Craswell, A.T. and Taylor, S.L. (1992), “Discretionary disclosure of reserve by oil and gas companies:an economic analysis”, Journal of Business Finance & Accounting, Vol. 19, pp. 295-308.

Daum, J. (2001), “Interview with Leif Edvinsson: intellectual capital: the new wealth ofcorporations”, The New Economy Analyst Report, 13 November, available at: www.juergendaum.com/news/11_13_2001.htm

Deegan, C., Rankin, M. and Voght, P. (2000), “Firm’s disclosure reaction to major social incidents:Australian evidence”, Accounting Forum, Vol. 24 No. 1, pp. 101-30.

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Draper, T. (1997), “Measuring intellectual capital: formula for disaster”, Stanford HooverInstitute Editorial, October, available at: www.drapervc.com/files/Hoover.html

Dye, R. (1985), “Disclosure of nonproprietary information”, Journal of Accounting Research,Vol. 23, pp. 123-45.

Edvinsson, L. and Malone, M.S. (1997), Intellectual Capital: Realising Your Company’s True Valueby Finding its Hidden Brainpower, Harper Business, New York, NY.

Gray, R., Kouhy, R. and Lavers, S. (1995a), “Corporate social and environmental reporting: areview of the literature and a longitudinal study of UK disclosure”, Accounting, Auditingand Accountability, Vol. 8 No. 2, pp. 47-77.

Gray, R., Kouhy, R. and Lavers, S. (1995b), “Methodology themes: constructing a researchdatabase of social and environmental reporting by UK companies”, Accounting, Auditing& Accountability Journal, Vol. 8 No. 2, pp. 78-101.

Guthrie, J. (2001), “The management, measurement and the reporting of intellectual capital”,Journal of Intellectual Capital, Vol. 2 No. 1, pp. 27-41.

Guthrie, J. and Parker, L. (1989), “Corporate social reporting: a rebuttal of legitimacy theory”,Accounting & Business Research, Vol. 19, pp. 343-52.

Guthrie, J. and Parker, L. (1990), “Corporate social disclosure practice: a comparativeinternational analysis”, Advances in Public Interest Accounting, Vol. 3, pp. 159-75.

Hackston, D. and Milne, M. (1995), “Some determinants of social and environmental disclosuresin New Zealand companies”, paper presented at the 1st Asian-Pacific InterdisciplinaryResearch in Accounting Conference, Sydney.

Hines, R. (1998), “Popper’s methodology of falsification and accounting research”,The Accounting Review, Vol. 63 No. 4, pp. 657-62.

Hossain, M., Tan, L.M. and Adams, M. (1994), “Voluntary disclosure in an emerging market:some empirical evidence from companies listed on the Kuala Lumpur Stock Exchange”,The International Journal of Accounting Education and Research, Vol. 29 No. 3, pp. 334-51.

Johanson, U., Eklov, G., Holmgren, M. and Martensson, M. (1998), “Human resource costing andaccounting versus the balanced scorecard”, report prepared for OECD, School of Business,Stockholm University, Stockholm.

Kaplan, R.S. and Atkinson, A.A. (1998), Advanced Management Accounting, 3rd ed.,Prentice-Hall, Englewood Cliffs, NJ.

Klein, D.A. and Prusak, L. (1994), “Characterising intellectual capital”, working paper, Centre forBusiness Innovation, Ernst & Young, Cambridge, MA, March.

Leadbeater, C. (1999), “New measures for the new economy”, paper to be presented at theInternational Symposium, Measuring and Reporting Intellectual Capital: Experience,Issues, and Prospects, Amsterdam, 9-11 June.

Lewis, G. (1997), “Building intellectual capital”, Management Accounting, Vol. 75 No. 6, p. 54.

Nonaka, I. (1991), “The knowledge-creating company”, Harvard Business Review,November/December, pp. 96-104.

Perelman, L. (1997), “Leading lights: author Tom Stewart”, Knowledge Inc., May, available at:http://webcom.com/quantera/llstewart.html

Pitt, H.L. (2001), “Speech by SEC Chairman: remarks before the AICPA Governing Council”, USSecurities and Exchange Commission, 22 October, available at: www.sec.gov/news/speech/spch516.htm

Roberts, R.W. (1992), “Determinants of corporate social responsibility disclosure: an applicationof stakeholder theory”, Accounting, Organisations and Society, Vol. 17 No. 6, pp. 595-612.

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Roselander, R. (1997), “Accounting for the worth of employees: is the discipline finally ready torespond to the challenge?”, Journal of Human Resource Costing & Accounting, Vol. 2 No. 1,pp. 9-26.

Sveiby, K.E. (1997), The New Organisational Wealth: Managing andMeasuring Knowledge-basedAssets, Barrett-Kohler Publishers, San Francisco, CA.

Thompson, P. and Yeung, M. (2001), “The determinants of transparency for Singaporean listedcompanies”, Research Paper Series, Division of Business and Management, University ofNottingham in Malaysia, June, available at: www.unim.nottingham.ac.uk/dbm/papers/2001-06.pdf

Tilt, C.A. (1994), “The influence of external pressure groups on corporate social disclosure: someempirical evidence”, Accounting, Auditing & Accountability Journal, Vol. 7 No. 4, pp. 47-72.

Unisys Corporation (1997), “Measuring the mettle of intellectual capital – conversation withDr Karl Erik Sveiby”, The Executive’s Guide to Electronic Business Solutions, October,available at: www.unisys.com/execmag/1997-10/journal/conversation.htm

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About the authorIndra Abeysekera is an Associate Professor in Accounting at University of Wollongong, havingpreviously held an academic post at The University of Sydney. Prior to joining academia, he hasworked in 20 industrial organisations spanning the private and public sectors, both overseas and inAustralia, as an employee in the early stages and as a consultant in accounting and business in thelatter stages of his career. They include Coopers & Lybrand (now PriceWaterhouseCoopers), ToyotaFinance Australia, Hawker de Havilland (now Boeing), Ansett Worldwide, GEC Alsthom, UnileverAustralia, and USAD. Over the past five years, he has published over 95 articles across a range ofacademic disciplines, on emotional capital, intellectual capital, international accounting, andknowledge management. His articles have appeared in refereed academic journals, conference papers,conference proceedings, professional journals and several business magazines. The refereedaccounting and business journals include Accounting, Auditing and Accountability Journal,Accounting History, Australian Accounting Review, Critical Perspectives on Accounting, HumanResource Costing and Accounting, Journal of Intellectual Capital, Research in Accounting in EmergingEconomies, andThe British Accounting Review. His articles also have appeared in CACharter,CIMAInsider, Financial Management, and several business magazines around the globe. He is on theeditorial board of Journal of Asia Business Studies, Journal of Intellectual Capital, Journal of HumanResourceCosting&Accounting, and Journal ofKnowledgeManagementPractice. He has presented hisideas and research findings at numerous refereed international conferences, professional accountancyinstitutions and universities. His opinion on accounting and business matters has been soughtand broadcast by radio, television and newspapers. In October 2004, Indra was listed as a “prominentSri Lankan abroad” on the Board of Investment of Sri Lanka web site, an accolade awarded to ahandful of Sri Lankan-born experts living abroad. Indra Abeysekera can be contacted at:Indraa@econ.usyd.edu.au

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