This note is part of Quality testing.

This study consists of three main projects covering (i) the relationship between disclosure quality and earnings management and (ii) the relationship between corporate governance and disclosure quality. Disclosure quality is measures using the IR Magazine Award, the forward looking information in the annual report, and the analyst forecast accuracy. Match-paired samples comprised of the winners and non-winners of the IR Magazine Award during the years from 2005-2008 were employed in this study. Simultaneity bias in all projects was remedied by the use of a simultaneous system of equation, which was estimated using two-stage least square regression (2SLS). This study provides several interesting findings. With regard to the first project, disclosure quality and earnings management, it is shown that all disclosure quality proxies are consistently reported significant negative relationship with earnings management in the OLS regression. However, audit committee characteristics and board characteristics reveal insignificant relationship with earnings management, except audit committee meeting which reported positive association. Concerning the potential complementary and substitutive effect of internal governance and disclosure quality in deterring earnings management, result of the interaction terms revealed that there is a complementary relationship between audit committee quality and disclosure quality (measured using Investor Relation Magazine Award) in deterring earnings management. When disclosure quality and earnings management are treated as endogenous, this study reveals that there is a significant bi-directional relationship between disclosure quality and earnings management, highlighting that causality can run in both directions. This suggests that future research should control for disclosure quality factors when examining the impact of corporate governance and earnings management and that the potential simultaneity between disclosure quality and earnings management should be considered in future models. With respect to the second project, corporate governance and disclosure quality, this study reveals that audit committee effectiveness, board meeting and board independent are significantly positively related to disclosure quality (measured using IR Magazine Award and the number of forward looking items in the annual report). With regard to the potential complementary or substitutive effect between board and audit committee characteristics in improving firm disclosure quality, this study reveal that there is a substitutive effect between board quality and audit quality in enhancing disclosure quality (measured using analyst forecast accuracy). If disclosure quality and board independence are treated as endogenous, there is a significant positive bi-directional relationship between them when disclosure quality is measured using the number of forward looking items. However, there is a negative bi-directional relationship and an insignificant bi-directional relationship shown when disclosure quality is measured using analyst forecast accuracy and the IR Magazine Award respectively.

The objective of this paper is to assess the information dealing with intellectual capital that firms disclose in presentations to sell-side analysts and the influences on these disclosures. Analysis of a sample of 257 reports from listed Spanish companies for 2000-2001 shows differences in disclosure levels by categories of intellectual capital. Companies usually report information regarding strategy, customers, and processes; information about research, development, and innovation is less often reported to financial analysts. Larger companies disclose higher levels of intellectual capital information, frequently outside presentations conducted after quarterly, half-year, or annual results announcements.

The study examines the relationship between the corporate disclosure on intellectual capital and five firm characteristics namely size, leverage, profitability, age and industry type. The research uses a meta-analysis technique by taking 19 articles published between 2003 to 2013. In this way, this study integrates and accumulates the findings of prior studies. The research finds a significant relationship between intellectual capital disclosure and the independent variables: size, profitability and industry.

Globalization and rapid technological development have created the lot of changes in the different sects of human life, including business sector. One of it is that traditional accounting and reporting practices couldn't explain the exact status of the business because of increasing importance of intangible assets rather than tangible. As an evidence for this, researchers have identified the growing disparity between book value and market value of the company. Hence, this paper is an effort to identify the determinant of Intellectual capital disclosure which is firm-specific in Indian context. As far IC concerned, it possesses a vital role because of as said before increasing disparity between market value and book value of companies. Literature are saying IC can explain or at least can reduce this disparity. This study has chosen leading pharmaceutical companies included in Pharma sector. For this study, annual reports of a sample of 10 companies from NSE Pharma Index are analyzed over a three-year period from 2015-2017. Content analysis has been applied to calculate Intellectual Capital Disclosure score and Regression models are used to examine the relationship between IC disclosure and the selected variables. Results reveal that IC disclosure in Indian pharmaceutical sector is increasing year by year. While considering multiple regression analysis, the age of the company and number of independent directors are showing a significant positive relationship with Intellectual Capital disclosure. In other hand, variables such as value added intellectual coefficient (VAIC) and leverage, size of the firm and profitability are showing an insignificant relationship with IC disclosure.

Over the past decade, knowledge assets and intellectual capital have been attracting an increasing amount of attention, not only from academics and CEOs, but also from national policy makers. To date, most studies of intellectual capital have focused at the organizational level, with an emphasis on explaining the role of “intangible assets” as a differentiator between accounting value and market value as a possible source of corporate competitive advantage. More recently, pioneers in the field, including the authors of this book, have begun to apply these methodologies to a broader scope, with the objective of comparing the intellectual capital indices at the national or regional level. As a result, an increasing number of world organizations and researchers are commissioned to investigate this future-oriented crucial national issue. Yet, the linkage between the value of intangible assets and how to quantify or benchmark it is still tenuous, not to mention easily misunderstood by a layman for guiding better decision making. With the belief that numbers talk and statistics hide valuable information, this book serves to present the authors’ research findings, covering 14 years (1995-2008) of intellectual capital information, comprised of human capital, market capital, process capital, renewal capital, and financial capital for 40 countries. The last three chapters go beyond analysis of current intellectual capital factors, and present practical tools for launching initiatives at the national level. The book will serve as an essential resource for researchers, policy makers, and business leaders concerned with issues of economic growth and competitiveness, innovation, and business creation.