The Report
In a knowledge intensive economy, a company’s intellectual capital, whether it is derived from its employees, customer databases or brands, undoubtedly contribute to a company’s success and its ultimate value. Most of these intangible assets can not be included within a company’s balance sheet and intellectual capital disclosures in the annual report and financial statements have been largely voluntary.
There are good reasons why companies may choose not to disclose information about these types of assets, not least the worry about losing competitive advantage, but there are clearly reasons why companies choose to make such voluntary disclosures. It is argued that one reason for disclosing such information is to reduce the information gap between companies and investors and thus reduce the cost of capital. This report investigates the relationship between intellectual capital disclosure and the cost of equity capital.
The results of this study indicate that firms which make greater levels of intellectual capital disclosure benefit from a lower cost of equity capital than firms making lower intellectual capital disclosures.
ISBN 978-1-904574-14-9
Price £15.00
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