The study of the communication of intellectual capital

The study examines the communication of intellectual capital (CIC), defined as information disclosure of an organization’s intangible assets through annual report and supplementary corporate disclosure (ARS). Three research gaps were identified: (1) There is insufficient understanding of the drivers behind corporate disclosure of IC in the ARS; (2) How IC is communicated for corporate reporting, particularly content and formats used; and (3) The relationship between CIC and organizational performance (OP) has not been established. The study of CIC draws from three theoretical perspectives. Stakeholder Theory ascribes management responsibility to report to multiple stakeholders and interests. Thus the need to explore factors underlying CIC (RO1). Legitimacy Theory highlights management’s discretion in reporting based on perceived importance to stakeholders, which questions what and how CIC is reported (RO2A). Finally, Impression Management Theory suggests possible influence of CIC in enhancing perception of respectability and importance, thus the examination of the relationship between CIC and OP (RO2B). To gather empirical evidence, data was collected from surveys, 1-to-1 interviews and ARS. Two global surveys were conducted with 200 senior executives of banks responsible for ARS, supplemented with 1-to-1 interviews from a smaller subset of executives. To address RO1, factor analysis was applied on the survey results, supplemented with 1-to-1 interviews. For RO2A, ANOVA analysis and content analysis was undertaken on ARS, supplemented with 1-to-1 interviews. For RO2B, Negative Binomial Regression was used to investigate the relationship between CIC and OP. In RO1, four factors were found to drive organizations in CIC, namely compliance, management responsibility to stakeholders, corporate leadership and collective behavior. Stakeholder Theory applied in the context of CIC uncovered four main groups of stakeholders to focus – regulators, community-at-large, investors, stockbrokers and analysts, and peers. In RO2A, structural capital information (SCI) was the most prevalent content, followed by human capital information (HCI) and relational capital information (RCI). On format, SCI reflected transparency, often presented as narratives and illustrations. RCI resonated with strength and reliability, frequently represented by pictures and graphs. HCI showcased organizational culture, typically displayed as pictures, graphs and tables. These findings identified underlying motives behind the use of content and format, containing tacit messages in CIC to support management’s legitimacy. For RO2B, HCI was found negatively correlated with return on assets (ROA). RCI was positively correlated with net profit margin and negatively with ROA. Finally, SCI was negatively correlated with solvency ratio. This study found that Impression Management Theory was applicable, particularly for organizations that were in financial distress or lagging in performance. This study offers several contributions. Firstly, this is among the first works that investigated factors underlying CIC in corporate reporting. It provides regulators with insights into forces that compel or hinder CIC, and updates literature on management’s thinking and priorities. Secondly, empirical evidence extends Stakeholder Theory in the context of CIC, and uncovers the use of content and formats in CIC to suggest legitimacy and impression management. For practice, this study highlights benefits of CIC and motivates organizations to disclose IC as part of corporate reporting. ​Doctor of Philosophy (WKWSCI)