Reporting Intellectual Capital in Annual Reports: Evidence from Indonesia

Abstract

This  exploratory  study  which  replicates  the  content  analysis  methodology  of  Guthrie et  all  (1999,  2004)  towards  Intellectual  Capital  (IC)  disclosures  in  the  annual  report  has set  several  objectives.  Primarily,  the  empirical  investigation  assesses  the  extent  to  which Indonesian  listed  companies  are  publicly  reporting  their  IC  both  the  amount  and  type  of information  being  reported.  Secondly,  the  investigation  also  examines  the  extent  to  which the various categories of IC are represented in the annual reports of the sample companies. Finally, the study explores the extent to which the level of IC disclosures could be related to companies' characteristics such as industry category, age, ownership structure and market capitalization.  The sample was Indonesia's 23 largest companies listed in the Jakarta Stock Exchange.  In  light  of  research  limitations,  the  preliminary  and  tentative  indings  of  this study  indicate  that  irst  of  all,  similar  to  indings  worldwide,  Indonesian  companies  have substantial intellectual capital and they do aware and disclose their intellectual capital in the annual reports. Secondly, IC that tends to be most often reported is relational capital, followed by human capital and organizational capital. Thirdly, even though the trend in IC disclosure as a whole is generally increasing, there is no conclusive and predictable pattern found.  Fourthly,  the  IC  identiied  and  reported  is  inconsistent  as  no  framework  available in  helping  the  companies  discloses  intellectual  capital.  Fifthly,  most  of  the  intellectual capital  components  identiied  are  in  qualitative  format.  Sixthly,  even  though  the  study  did not ind a conclusive evidence regarding the relationship between the level of  IC  disclosure and  company  characteristics  such  as  industry,  age,  ownership  structure,  and  market capitalization, however some indings are noteworthy. Finally, a comprehensive framework is yet to be developed, especially for collecting and reporting IC formation for consistency and comparability purposes. ");} // --> activate javascript