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Intellectual capital and the capital market: a review and synthesis

Intellectual capital and the capital market: a review and synthesis Purpose – The purpose of this paper is to review and synthesise current knowledge on the importance of intellectual capital (IC) information to the capital market. Design/methodology/approach – The paper is by way of literature review. It reviews the empirical research literature from different methodological strands and synthesises the findings to provide evidence on the impact/importance/usefulness of IC from a capital markets perspective. Findings – Importance of IC information has been examined using various research methods including capital markets research, questionnaire surveys, face‐to‐face interviews, experimentations, verbal protocol analysis and content analysis of analyst reports. These studies provide evidence on the usefulness/importance of many types of IC information. Also, evidence from IC disclosure studies on initial public offering prospectuses sheds light on perceived importance of types of IC information to the capital market. However, there is a scope for more research to refine the current understanding of the importance of IC to the capital market. Practical implications – By reviewing and synthesising the literature, this paper provides an important source of reference for future researchers and policy makers who wish to formulate guidelines for IC reporting to better meet the information needs of capital market actors. It also highlights future research directions. Originality/value – This is the first‐published literature review on the importance of IC that provides a comprehensive review of studies adopting various research methods. Prior reviews have been limited to value‐relevance and/or predictive ability studies. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Human Resource Costing & Accounting Emerald Publishing

Intellectual capital and the capital market: a review and synthesis

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Publisher
Emerald Publishing
Copyright
Copyright © 2010 Emerald Group Publishing Limited. All rights reserved.
ISSN
1401-338X
DOI
10.1108/14013381011095472
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to review and synthesise current knowledge on the importance of intellectual capital (IC) information to the capital market. Design/methodology/approach – The paper is by way of literature review. It reviews the empirical research literature from different methodological strands and synthesises the findings to provide evidence on the impact/importance/usefulness of IC from a capital markets perspective. Findings – Importance of IC information has been examined using various research methods including capital markets research, questionnaire surveys, face‐to‐face interviews, experimentations, verbal protocol analysis and content analysis of analyst reports. These studies provide evidence on the usefulness/importance of many types of IC information. Also, evidence from IC disclosure studies on initial public offering prospectuses sheds light on perceived importance of types of IC information to the capital market. However, there is a scope for more research to refine the current understanding of the importance of IC to the capital market. Practical implications – By reviewing and synthesising the literature, this paper provides an important source of reference for future researchers and policy makers who wish to formulate guidelines for IC reporting to better meet the information needs of capital market actors. It also highlights future research directions. Originality/value – This is the first‐published literature review on the importance of IC that provides a comprehensive review of studies adopting various research methods. Prior reviews have been limited to value‐relevance and/or predictive ability studies.

Journal

Journal of Human Resource Costing & AccountingEmerald Publishing

Published: Sep 7, 2010

Keywords: Capital markets; Intangible assets; Intellectual capital; Research

References