Towards improved information disclosure on intellectual capital

International Journal of Technology Management

Volumn 20, Issue 5-8, 2000, Pages 715-741

  Rylander, Anna ^a,b,c   Jacobsen, Kristine ^a,b,d,e   Roos, Göran ^a,b,f,g  

^a Intellectual Capital Services Ltd   (United Kingdom)

^b Intellectual Capital Services Ltd   (United Kingdom)

^c UPPSALA UNIVERSITY   (Sweden)

^d BI NORWEGIAN BUSINESS SCHOOL   (Norway)

^e Oslo School of Economics ^*  (Norway)

^f MONASH UNIVERSITY   (Australia)

^g UNIVERSITY OF READING   (United Kingdom)

Author keywords

[No Author keywords available]

Indexed keywords

ADMINISTRATIVE DATA PROCESSING; FINANCE; INDUSTRIAL ECONOMICS; INFORMATION MANAGEMENT; INFORMATION USE; MARKETING; VALUE ENGINEERING;

BALANCED SCORECARD; INFORMATION DISCLOSURE; INTANGIBLE ASSETS; INTELLECTUAL CAPITAL; VALUE CREATION;

INDUSTRIAL MANAGEMENT;

EID: 0033652045     PISSN: 02675730     EISSN: None     Source Type: None    
DOI: 10.1504/ijtm.2000.002892     Document Type: Article

References (53)

1. AICPA (1994) Improving Business Reporting - A Customer Focus, Special Committee on Financial Reporting, American Institute of Certified Public Accountants, New York, NY.
2. Financial Times (1998) Finance Directors Cast Doubt on Share Valuations, 27 May.
3. Eccles, R.G. and Mavrinac, S.C (1995) 'Improving the corporate disclosure process', Sloan Management Review, Summer.
4. Lev, B. (1989) On the usefulness of earnings and earnings research: lessons and directions from two decades of accounting research', Journal of Accounting Research Supplement, Vol. 27, pp.153-192.
5. Lev, B. and Zarowin, P. (1998) 'Measuring intangible investment: the boundaries of financial reporting and how to extend them', Organization for Economic Cooperation and Development (OECD).
6. For the purpose of this paper we will use the following definition: Intellectual Capital (IC): any stock or flow under the control of the firm that contributes to the value creation of the firm. Intellectual capital can be subdivided into human and structural capital. IC stocks consist of human resources - the knowledge, experience, competence and abilities of the employees that are of value to the firm, and structural resources - the firm's valuable relationships, processes, structure, systems, brands, intellectual property, corporate culture, etc. By flows we mean the transformations between and within stocks of human, structural, physical and financial capital. For example formalizing knowledge into a concept protected by intellectual property is a flow from human to structural capital and the sales of that intellectual property is a flow from structural to monetary capital. (Due to the relative youth of the application of the concept of IC there is not yet a generally established definition, although most definitions are similar. For a more elaborate definition see Roos, et al. [7,8].
7. Roos, G., Roos, J., Dragonetti, N. and Edvinsson, L. (1997) Intellectual Capital: Navigating in the New Business Landscape, Macmillan, London.
8. Roos, G., Dragonetti, N., Jacobsen, K. and Bontis, N. (1999) 'The knowledge toolbox', European Management Journal, Vol. 17, No. 4, August.
9. Edvinsson, L. and Malone, M.S. (1997) Intellectual Capital - Realizing Your Company's True Value by Finding it's Hidden Brainpower, Harper Business, New York.
10. Sveiby, K.E. (1997) The New Organizational Wealth: Managing and Measuring Knowledge-Based Assets, Berret-Koehler, San Francisco.
11. Arthur, B. (1996) 'Increasing returns and the new world of business'. Harvard Business Review, July-Aug., pp.100-109.
12. Amir, E. and Lev, B. (1996) 'Value-relevance of non-financial information: the wireless communications industry'. Journal of Accounting and Economics, Vol. 22, pp.3-30
13. Mavrinac, S. and Seisfeld, A.G. (1998) 'Measures that matter: an exploratory investigation of investors' information needs and value priorities', Organization for Economic Cooperation and Development (OECD).
14. Mavrinac and Boyle (1995)
15. Reich, S. and Rylander, A, (1997) 'Det intellektuella kapitalets framtid i årsderovisningen', Diploma Thesis, University of Uppsala, Department of Business Administration.
16. For the purpose of this paper we use the AICPA [1] definition of Business reporting: "The information a company provides to help users with capital-allocation decisions about a company. It includes a number of different elements, with financial statement as one of those elements".
17. For the purpose of this paper we use the AICPA [1] definition of Users of business reporting: "Users - investors and creditors, including potential investors and creditors, and their advisors that use business reporting as a basis for capital-allocation decisions".
18. Smith, G.W. and Parr, R.L. (1994) Valuation of Intellectual Property and Intangible Assets, second edition, John Wiley & Sons, Inc. New York.
19. Rivat, L. and Nulty, K. (1998) 'Accounting for intangible assets', Boletín de Estudos Económicos, Universidad de Deusto Comercial, Vol. 53, Agosto, No. 164.
20. The Society of Management Accountants of Canada (1998) The Management of Intellectual Capital: The Issues and the Practice, Hamilton, Ontario, Canada.
21. For further literature on this subject, see the work of Brian Arthur.
22. Brynjolfsson, E. and Yang, S. (1998) The Intangible Benefits and Costs of Investments: Evidence from Financial Markets.
23. Roos, G. and Roos, J. (1997) 'Exploring the concept of intellectual capital', Long Range Planning, Vol. 31, pp.150-153.
24. Knutson, P. (1992) 'Financial reporting in the 1990s and beyond: a position paper of the Association for Investment Management and Research', Charlottesville, VA., Association for Investment Management and Research (AIMR).
25. AIMR (1997) Reply to the Proposed International Accounting Standard, Intangible Assets (E60), Association for Investment Management and Research.
26. Sveiby, K-E. (1989) Den Osynliga Balansräkningen, Stockholm: Affärsvärlden Förlag AB.
27. Jonsson, A., Jonsson, T. and Roos, J. (1992) 'Kunskapskapitalet i årsredovisningen', Diploma Thesis, University of Uppsala, Department of Business Administration.
28. Norling, E. and Öberg, L. (1993) 'Mjuka nyckeltal i årsredovisningen', Diploma Thesis, University of Uppsala, Department of Business Administration.
29. Öhman, P. (1996). Kunskap i årsredovisningen - hur redovisar kunskapsföretagen sin viktigaste resurs?, University of Luleå, Department of Business Administration.
30. The balanced scorecard approach has become widely spread during the 1990s as a multidimensional measurement system to guide managers' decisions. A Balanced Scorecard includes leading and lagging indicators and measurement focusing on the outside and the inside of the company. For a full description see Kaplan, R.S. and Norton, D.P. [31]. A similar suggestion emerged in France in the 1950s and 1960s and coalesced into a tool called Tableau de Bord; the literature on the Tableau, however, was never translated and thus had little echo outside France [32].
31. Kaplan, R.S. and Norton, D.P. (1996) The Balanced Scorecard: Translating Strategy into Action, Harvard Business School Press, Boston, MA.
32. Epstein, M.J. and Manzoni, J.-F. (1998) 'Implementing corporate strategy: from tableaux de bord to balanced scorecards', European Management Journal, Vol. 16, No. 2, pp.190-203.
33. For a more extensive description of Skandia's work with IC, see Edvinsson and Malone [9] or Edvinsson, L. [34].
34. Edvinsson, L. (1997) 'Developing intellectual capital at Skandia', Long Range Planning, Vol. 30, No. 3
35. Sullivan, P. (1997) Profiting from Intellectual Capital, John Wiley & Sons Inc.
36. Sorri, M. and Gill, J.H. (1989.) A Post-Modern Epistemology: Language, Truth and Body, E. Mellen Press, New York.
37. Creelman, J. (1997) 'Tomorrow's success lies beyond the pound signs', Financial Director, September, pp.26-28.
38. Chew, D.H., Jr. (1999) The New Corporate Finance, Irwin/McGraw-Hill.
39. Jonas, G.J. and Young, S.J. (1998) 'Bridging the gap: who can bring a user focus to business reporting', Accounting Horizons, June.
40. Note, however, that the value of a certain brand may very well differ from firm to firm depending on the other brands possessed by the firm, the experience and knowledge of the marketing people, etc.
41. The Canadian Institute of Chartered Accountants (CICA) has reached a similar conclusion through their research on IC reporting. CICA has begun to explore a potential framework for assessing long-term value creation for all stakeholders, refereed to as Total Value Creation™ or TVC™. More information about this initiative can be found at the CICA web page at www.cica.ca.
42. For a more extensive description of the IC-index approach, see Roos et al. [7].
43. Note that, provided value is defined as shareholder value, measures of quality and execution of strategy can be interpreted as leading measures of financial performance. Forward-looking information and information on strategy are then two sides of the same coin.
44. The results of this project are expected to be published during summer 2000.
45. Slater, S. and Stanley, N.J. (1998) 'Customer-led and market-oriented: let's not confuse the two', Strategic Management Journal, Vol. 19, pp.1001-1006.
46. Information on this initiative can be found at the web page of the Department of Trade and Industry at www.efs.dk. This effort is part of the 'complementary balance sheet approach', according to the terminology used in this paper.
47. Tjänsteförbundet (1993) 'Tjänsteföretagens värden - rekommendationer om styrtal i tjänsteföretag', Skriftserie, No. 8.
48. Healy, P. and Palepu, K.G. (1993) 'The effect of firms' financial disclosure strategies on stock prices', Accounting Horizons, March.
49. Kelly, J. (1999) 'User unfriendly: modem corporate reporting fails to provide the right data for investors', Financial Times, 14 Jan.
50. Arthur, B. (1990) 'Positive feedback in the economy', Scientific American, Feb., pp.92-99.
51. Majumdar, S.K. (1998) 'On the utilization of resources: perspectives from the US telecommunications industry', Strategic Management Journal, Vol. 19.
52. Ramfrez, R. (1999) 'Value co-production: intellectual origins and implications for practice and research', Strategic Management Journal, Vol. 20, pp.49-65.
53. Sveiby, K-E. (1994) 'Towards a knowledge perspective on organization, Doctoral Dissertation, Department of Business Administration, University of Stockholm.