The nature and extent of voluntary intellectual capital disclosures by Australian and UK biotechnology companies

The nature and extent of voluntary intellectual capital disclosures by Australian and UK... Purpose – The purpose of this research project is to compare the nature and extent of voluntary intellectual capital disclosures (ICD) by UK and Australian biotechnology companies. The motivating research question was whether the nature and extent of voluntary ICD by preparers of financial report data in these countries reflected the relative maturity of the UK, compared to Australian industry. Design/methodology/approach – ICD was measured in annual reports and financial statements published on the company websites. A Danish disclosure index was used to evaluate voluntary disclosures by 156 companies about customers, employees, IT, strategy, R&D and processes (78‐items scored for each company). Findings – A significant leverage effect was demonstrated in relation to the “nature” of ICD by UK and Australian biotechnology companies. Interestingly, mean customer ICD were higher in annual reports from high‐leveraged compared to low‐leveraged Australian firms. In contrast, UK firms showed higher mean R&D ICD for low‐leveraged firms than high‐leveraged firms. With regards to the “extent” of ICD measured, the study demonstrated a significant country effect. Research limitations/implications – Potential limitations or bias may exist from the use of the disclosure index: binary scoring of disclosure versus non‐disclosure reduces the richness of data otherwise obtainable by limited case study or interviews; and data collection is limiting – narrative with managers actually preparing ICD is not possible. Practical implications – Australian company financial accountants and managers preparing and/or including ICD information could be in danger of underestimating the importance of information asymmetry existing with lenders. Originality/value – This finding contrasts the legitimate R&D focused ICD of low‐leveraged UK firms; namely to attract stakeholder attention to their expanding intellectual property base, with the findings from Australian firms' with a relatively predictable and naïve customer focus. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Intellectual Capital Emerald Publishing

The nature and extent of voluntary intellectual capital disclosures by Australian and UK biotechnology companies

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Publisher
Emerald Publishing
Copyright
Copyright © 2010 Emerald Group Publishing Limited. All rights reserved.
ISSN
1469-1930
DOI
10.1108/14691931011085669
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this research project is to compare the nature and extent of voluntary intellectual capital disclosures (ICD) by UK and Australian biotechnology companies. The motivating research question was whether the nature and extent of voluntary ICD by preparers of financial report data in these countries reflected the relative maturity of the UK, compared to Australian industry. Design/methodology/approach – ICD was measured in annual reports and financial statements published on the company websites. A Danish disclosure index was used to evaluate voluntary disclosures by 156 companies about customers, employees, IT, strategy, R&D and processes (78‐items scored for each company). Findings – A significant leverage effect was demonstrated in relation to the “nature” of ICD by UK and Australian biotechnology companies. Interestingly, mean customer ICD were higher in annual reports from high‐leveraged compared to low‐leveraged Australian firms. In contrast, UK firms showed higher mean R&D ICD for low‐leveraged firms than high‐leveraged firms. With regards to the “extent” of ICD measured, the study demonstrated a significant country effect. Research limitations/implications – Potential limitations or bias may exist from the use of the disclosure index: binary scoring of disclosure versus non‐disclosure reduces the richness of data otherwise obtainable by limited case study or interviews; and data collection is limiting – narrative with managers actually preparing ICD is not possible. Practical implications – Australian company financial accountants and managers preparing and/or including ICD information could be in danger of underestimating the importance of information asymmetry existing with lenders. Originality/value – This finding contrasts the legitimate R&D focused ICD of low‐leveraged UK firms; namely to attract stakeholder attention to their expanding intellectual property base, with the findings from Australian firms' with a relatively predictable and naïve customer focus.

Journal

Journal of Intellectual CapitalEmerald Publishing

Published: Oct 19, 2010

Keywords: Intellectual capital; Disclosure; Biotechnology

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