Intellectual capital of listed companies in China Empirical Study of Voluntary Disclosure

[Abstract] This article 100 of the largest non-financial listed companies in 2007 annual report for the sample of voluntary disclosure of information on its intellectual capital to inspect the situation. It was found that intellectual capital of listed companies is relatively low level of voluntary disclosure of information which organizational capital level of disclosure of information, followed by information on customer capital, and finally the human capital information; intellectual capital voluntary disclosure of information more obvious differences in the degree of Industry, information technology and other high-tech Industry's relatively high level of disclosure, and electricity and other traditional industries low level of the company's disclosure.

[Keywords:] intellectual capital; voluntary disclosure; content analysis

I. Introduction

Era of knowledge economy, stakeholders are increasingly concerned with information related to intellectual capital, intellectual capital is not only the enterprises to create value and achieve sustainable source of competitive advantage, but also the future of innovation and the key to profit growth. Lev and Zarowin (1999 ) by analyzing accounting data and market value of the correlation over the past 20 years prove the usefulness of accounting information has been reduced. PricewaterhouseCoopers, a series of surveys conducted in 2001 found that investors think the most important information, only three is financial information (cash flow, profit, gross margin), and the remaining seven, there are two messages from the internal data (strategic direction and competitive landscape), and the remaining five are intangible, including market growth, management the quality of the team, market size, market share and market expansion; investors that the medium can be divided into three categories of important information: the customer (distribution channels, brand, customer turnover rate), employee (intellectual capital, employee retention and each employee's income) and innovation (new product revenue, the success rate of new products, R & D expenditures and product Development cycle). These investors and analysts believe that almost all the important information is intellectual capital, but most of the management has not been disclosed, resulting in information asymmetry. Therefore, the intellectual capital of listed companies in the Voluntary Disclosure of information for the promotion of voluntary disclosure of listed companies to increase the degree of reducing information asymmetry, and promote the sound Development of capital markets is significant.


Second, the literature review

Since the last three decades, outside the accounting profession dedicated to the Research report on capital market efficiency (Healey and Palepu, 2001). Botosan (1997) found that the degree of information disclosure can reduce the cost of capital; Sengupta (1998) prove that the disclosure can improve reduce the cost of debt; Healey et al. (1999) found that increased disclosure will increase earnings per share results, but has nothing to do with the current and expected earnings; Gelb and Zarowin (2000) found that companies with higher disclosure standards, and its stock price and the relevance of future earnings higher. In order to reduce information asymmetry and improve the efficiency of capital markets, many countries have called on the extent of information disclosure of listed companies, Denmark has also prepared a special guide to the intellectual capital disclosures. Based on the field of intellectual capital Development achievements of the first group of pioneer began to explore the intellectual capital report, is the first of its kind in Sweden's largest insurance and financial companies - Scania Diaz (Skandia), who in 1994 designed the navigation model, systematically explains the various components of intellectual capital elements and their relationships .1997, Denmark organized a group of enterprises engaged in intellectual capital Development, these enterprises have been released of the intellectual capital report, followed by Asia, Europe, Middle East, the disclosure of intellectual capital in some enterprises have also made important progress.

Disclosure of intellectual capital Research began in the last years of the 20th century, late start, most of the stay abroad, the report of the model in the introduction, and put forward for the intellectual capital of listed companies reporting model. The Research is usually divided into two, one species is added to the traditional financial reporting and intellectual capital-related accounts and disclosed in the table, non-financial information disclosed in the balance sheet (Tan Jinsong, 2001; Liang Xin Lai, the official Xiaochun, 2004); the other is prepared separately intellectual capital reporting, such as Xu Chengxing (2003) proposed the main intellectual capital reporting forms and schedules, consisting of statements reporting framework. Zhang Bing hair, thousand mighty (2004) report on corporate intellectual capital, from the intellectual capital investment, knowledge accumulation of capital and intellectual capital performance of the three enterprises with regard to the intellectual capital report. the practice of disclosure of intellectual capital Research involves small, Zhang Dan (2008) Corporate Governance Center of the Chinese Academy of Social Sciences's Top 100 Listed Companies in 2006 A-shares in 49 listed companies from 2001 to 2005 annual reports of 226 samples, the study found the annual report of listed companies on human capital, organizational capital and customer capital and other form of intellectual capital disclosure already exists, and the disclosure of content increased year by year; intellectual capital disclosure on the price significantly affected; intellectual capital disclosures with Industry differences. Ranqiu Hong et al (2007) China 2005 223 listed company's annual report on public disclosure of non-monetary measurement of intellectual capital information for content analysis, monetary measurement of intellectual capital information to estimate the empirical results show that the intellectual capital of organizations had a positive operating performance, positive impact to the currency of intellectual capital measurement information on the capital market with a more significant correlation between the value, rather than monetary measures The value of intellectual capital related information has not been evident at the same time, these Industry differences are found.

However, the level of disclosure as a measure of intellectual capital using the content analysis, the relatively poor reproducibility, so it is necessary to expand the sample size, the intellectual capital of listed companies disclose the status of ongoing studies to further clarify the characteristics of corporate intellectual capital disclosures for China to build intellectual capital disclosure guidelines, effective guidance for disclosure of intellectual capital of listed companies provide an important basis for practice.


Third, the study design

(A) sample selection
This paper selects the size of the top 2007 of 100 non-financial annual reports of listed companies as samples, chosen to reduce the scale of the larger companies. Existing literature that the level of disclosure of intellectual capital associated with company size (Bozzolan et al., 2006; Zhang Dan, 2008). Although Striukova et al. (2008) empirical results indicate that the annual report of the level of disclosure of intellectual capital is not the best of the carrier, however, chose to report the literature for the analysis sample (Abeysekera and Guthrie, 2005; Bozzolan et al., 2006; Guthrie et al., 2007), and in addition to annual reports, the country's listed companies to disclose additional information such as network information, news conferences and other small, so this choice of sample companies annual report. the sample companies by sector in Table 1, according to CSRC by major sectors of Industry classification.

(B) the level of disclosure of intellectual capital measurement
As intellectual capital information in annual reports are mostly text and graphic form, in order to identify and compare different corporate disclosure information on intellectual capital, there are most of the literature, using content analysis (Beattie and Thomson, 2007; Guthrie and Abeysekera, 2006 ; Guthrie and Petty, 2000; Guthrie et al., 2004). However, this method popular in recent years, criticism of, for example, Beattie and Thomson (2007) that the absence of detailed coding rules, the concept of intellectual capital elements of the boundary is unclear, readers is difficult to judge the categories of intellectual capital elements. This article will detail the classification of intellectual capital, and the meaning of the elements of intellectual capital measurement methods of information disclosure.

1. Intellectual capital elements of the meaning of the classification and
While there is no generally accepted definition of intellectual capital, intellectual capital reporting forms and sizes, but contain similar content, mainly human capital, organizational capital and customer capital, that "HSC" structure. Guthrie and Petty (2000 ) proposed three types of 24 elements of the disclosure framework for intellectual capital, human capital consists of 6 elements, namely, Know-how, education, professional qualifications, job-related knowledge, work-related capacity, innovative spirit; organizational capital includes nine elements, namely copyright, patents, trademarks, management philosophy, corporate culture, management processes, information systems, network systems, financial relations; customer capital includes nine elements, namely the brand, customers, customer satisfaction, corporate reputation, distribution channels, business partnerships, licensing contracts, favorable contract, concession contracts. This framework is Brennan (2001) and April et al. (2003) used. Bozzolan et al. (2003) cut off management philosophy, financial relations and innovation are three elements, Research project formed after the joining elements of the analytical framework of 22 elements. Abeysekera and Guthrie (2005) further optimization of the elements of intellectual capital, and the meaning of the elements are described. based on the structure, taking into account China's current status, and intellectual capital management report the content and structure, I will type the elements of intellectual capital structure is set to 3 classes of 17 elements. reposted elsewhere in the Research Papers Download http://www.hi138.com
(1) human capital. Human capital is the knowledge of employees, experience, skills, attitudes, combined, including training and Development, innovation, employee safety, employee relations, employee benefits and employee status of six elements. Training and Development refers to Know -how, professional qualifications and training; innovative spirit that sense of innovation, innovation, interest, innovation, courage and commitment to innovation; the safety of employees of an enterprise security measures, security authentication; employee relations, union organizing activities that employees participate in social activities; employee benefits refers to the employee and management compensation, employee benefits, employee stock ownership plan; employee status, including number of employees, professional composition, education level, expert qualifications, age, and personnel changes and other employees.

(2) organizational capital. Organizational capital is the basic framework is the mechanism for organizing human capital and processes, including intellectual assets, management processes, information and network systems, corporate culture, financial relations, research and development 6 elements. Intellectual capital including copyright, trademarks and patents; management process refers to the management and operation of the process; information and network system is to ensure the effective functioning of intellectual capital and technical support, mainly referring to the company's information systems, such as the Intranet, information-intensive, information technology capabilities; culture is recognized and all employees comply with characteristics of the organization's mission, vision, purpose, spirit, values ​​and philosophy; financial relations is the business and investors, banks and other financiers of the relationship; R & D is means for the development of new products or services for a study.

(3) customer capital. Customer capital, including brand and corporate image, customer loyalty, business partnerships, distribution channels and market share of the five elements. Brand and corporate image, including brand, quality standards and corporate reputation; customer loyalty, including customer satisfaction degree of customer loyalty, customer ownership, customer retention, customer service, etc.; business cooperation, including commercial cooperation, licensing agreements and franchise agreements; distribution channels, including sales, retail, franchise and network; market share, including product or service market share, market position.

2. The degree of disclosure of intellectual capital measurement methods
Based on previous studies, this paper uses content analysis to measure the intellectual capital of the company's level of voluntary disclosure of information. Content analysis is an important assumption is that the number or frequency of disclosure of the higher, indicating that the more important issue. Some documents in accordance with relevant terms , phrases, sentences, paragraphs, to measure the length of the number of elements of the disclosure, and some word documents only the number of occurrences only to measurement, regardless of its length (Beattie and Thomson, 2007). If you limit the length of the annual report, then the factor share of greater length, the more important elements, if there is no page limit annual reports, as there is no additional cost, increase the length of elements of the disclosure may not provide additional information. China's listed company's annual report does not limit the length, uneven length of the report, long more than 200 pages shorter than 100 pages, this paper choose to count, excluding the length of the method to measure the extent of disclosure of intellectual capital. reference Bozzolan et al. (2003) the counting method, this choice paragraph as the unit of analysis to measure Voluntary disclosure of intellectual capital elements of the number of judgments is mainly based on the meaning of the paragraph, not just specific words. If the information in the framework of intellectual capital elements in a certain period of any disclosure, the disclosed elements of count 1, if not disclosed, the notation 0, if a certain element of repetition of information disclosed in the annual report, only recorded once. Annual Report of the subtotal after, you can get information on the company's intellectual capital for each type of each element of the extent of voluntary disclosure .

In the measurement of intellectual capital of each listed company's annual report the extent of voluntary disclosure, you must carefully study the report, identify and count consistent with the meaning of intellectual capital elements of the content. In order to improve the credibility of the process, one of the authors and a graduate student paper read 10 annual report samples, the samples were measured separately disclose the extent of the company's intellectual capital, and then compare the two discussed the points table, after repeated discussions, the two points difference between the smaller and smaller, until the agreement . The two raters then independently report on the remaining 90 rate, if the scores are consistent, then the scoring end of the process, if not, then continue the discussion until consensus.


Fourth, empirical results and analysis

(A) Voluntary disclosure of intellectual capital elements of the descriptive statistical analysis
Table 2 lists the elements of intellectual capital in annual reports the frequency of voluntary disclosure of descriptive statistics.


Table 2 shows the sample of voluntary disclosure of intellectual capital company's annual report the frequency in between 2-55, mean 22.98, standard deviation of 14.419, indicating that the sample intellectual capital annual report low level of voluntary disclosure of information (42.5 UK, Italy 46.33, see Bozzolan et al., 2003), relatively large differences between the companies, which is immature capital market, listed companies of varying quality, the overall low level of disclosure of environmental match. it may be because of the lack of intellectual capital, the end of 2005 promulgated by the World Bank's "Wealth of Nations report," America's intangible assets is 99 times, which is leading the wealth gap between China and developed countries the main reason. Although China is committed to knowledge-based economy, but because imperfect legal system, particularly the enforcement of intellectual property law is not enough, the effect is not obvious. The three elements of intellectual capital, organizational capital voluntary disclosure of the frequency of the highest average of 14.64; followed by the customer capital, the average was 6.14; Finally, human capital, the mean was only 2.2. This is Xiao (2008) of the same conclusions, but with other countries such as Britain and Italy (Bozzolan et al., 2003), Sri Lanka (Abeysekera and Guthrie, 2005) the different conclusions of the study, these countries Disclosure is the highest level of customer capital information, followed by structural capital information. that listed companies in China with particular emphasis on intellectual capital management process, the accumulation of human capital management and less emphasis. In the knowledge economy, human capital is the core of intellectual capital , is the most initiative and innovative spirit of the value of the drive listed companies in China should actively cultivate human capital, strengthening of human capital management. Also Listed Company capital information and human capital disclosing the number of standard deviations were 5.595 and 2.688, illustrate the difference between the company's information disclosure is very large. disclosures of information in organizational capital, the management process disclosed the most, average up to 10.38, indicating that the management of listed companies emphasize intellectual capital, management intentions and outstanding management capabilities. The information in customer capital disclosed in the disclosure of brand and corporate image high frequency, indicating that listed companies in China increasingly focus on brand cultivating, through brand development, company image building to increase their market share, access to long-term competitive advantage. employee benefit information is the human capital elements of the highest level of disclosure, disclosure of employee benefits through the plan, to attract and retain top-notch talent, enhance their competitiveness.


(B) voluntary disclosure of intellectual capital elements of the industry Differences in the
Using the industry classification in Table 1 intellectual capital as a survey based on different elements of disclosure of the industry, due to "paper and printing industry," only a business, so get rid of the industry, the remaining 13 industries were analyzed and the results shown in Figure 1 . It can be seen from Figure 1, the information technology industry's highest level of intellectual capital disclosure; followed by the electronics industry, both industries are high-tech industry, dependence on intellectual capital is high, its knowledge, technology and information elements of the master and the application will determine the success of business; disclosure of the lowest level of the industry is "electricity, coal and water production and supply industry", these industries are traditional industries, competition is not very intense, mainly by the scale of competitive advantage. Human Capital is the highest level of information disclosure, "the oil, chemical, plastic, plastic industry"; followed by the mining industry, poor working conditions in these industries, companies are increasingly concerned about the safety and health of employees and training, attention to the harmonious development of man and society, other sectors of human capital are relatively low level of disclosure of information, an insignificant difference. organizational capital is the highest level of information disclosure information technology industry; followed by the construction industry and electronics industry; the lowest level of disclosure is "electricity, coal and water production and supply. "highest level of customer capital, information disclosure is the information technology industry, concerned about the relationship with the outside world, emphasis on nurturing customer loyalty with customers and suppliers, the lowest is" electricity, coal and water production and supply Industry. "

V. Conclusions

In this paper, building human capital, organizational capital and customer capital of the three elements of intellectual capital disclosure framework for the company, based on the analysis of the 2007 China's largest 100 listed companies disclose the extent of intellectual capital, the results show that:
1. Intellectual capital of listed companies to voluntarily disclose information on the extent of not only low, but relatively large differences between each other; in the framework of intellectual capital disclosure of the three elements, organizational capital level of disclosure of information, followed by information on customer capital, and finally human capital information. Links http://www.hi138.com Research Papers Download 2. Intellectual capital of listed companies to voluntarily disclose the extent obvious differences between industries, information technology and electronics and other high-tech industry's relatively high level of disclosure, and electric power, coal and water production and supply of traditional industries such as level of disclosure than low.

China has taken the initiative through the annual reports of listed companies to disclose information on intellectual capital, however, the absence of relevant guidelines and rules of the diversity of intellectual capital elements, and elements of varied level of disclosure, it is necessary to develop guidelines for intellectual capital disclosure, disclosure of information to determine the industry The basic framework and main content to reduce the information asymmetry, and promote the rapid development of capital markets.


[Main references]
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[2] Abeysekera, I. and Guthrie, J. Annual reporting trends of intellectual capital in Sri Lanka. Critical Perspectives in Accounting, 2005,16 (3) :151-163.

[3] Bozzolan, S., O'Regan, P., Ricceri, F. Intellectual capital disclosure (ICD) in listed companies: a comparison of practice in Italy and the UK. Journal of Human Resource Cost and Accounting, 2006,10 (2): 92-113.

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[5] Guthrie, J., Petty, R., Ricceri, F. Intellectual Capital Reporting: Lessons from Hong Kong and Australia. Research Report, 2007. The Institute of Chartered Accountants of Scotland, Edinburgh, Scotland.

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[7] Mohammad J. Abdolmohammadi, Waltham. Intellectual Capital Disclosure and Market Capitalization. Journal of Intellectual Capital. 2005,6 (3): 397-413.

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Links to Research Papers Download http://www.hi138.com