The current issue and full text archive of this journal is available at

www.emeraldinsight.com/1469-1930.htm

Intellectual
Analyzing intellectual capital capital
information in sustainability information
reports: some empirical evidence
Lino Cinquini, Emilio Passetti, Andrea Tenucci and Marco Frey 531
Istituto di Management, Scuola Superiore Sant’Anna, Pisa, Italy

Abstract
Purpose – The purpose of this paper is to investigate the content, frequency and quality of
intellectual capital voluntary disclosure (ICVD) and the changes that took place over two years (2005
and 2006) in a sample of 37 sustainability reports published by Italian listed companies.
Design/methodology/approach – The intellectual capital framework consists of three levels: “IC
categories”, “IC items” and “IC indicators”, while content analysis was performed using a quality
multidimensional scheme composed of three disclosure profiles, namely, time orientation, nature of
information and type of information.
Findings – The findings evidence a high and increasing incidence over time of ICVD, with strong
emphasis on human capital disclosure, which represents the most reported category, followed by
relational and organisational capital. ICVD is mainly expressed in non-financial, quantitative and non-
time-specific terms with a low level of forward-looking information.
Research limitations/implications – This study is based on a small sample of sustainability
reports; the content analysis process entails some subjective judgments.
Practical implications – From a firm perspective, sustainability reports can be used in synergy
with annual reports and other public and private documents to provide IC information. From a user
perspective, sustainability reports can be used to acquire IC information over and above information
acquired from other documents.
Originality/value – Sustainability reports and ICVD quality have thus far been investigated only to
a limited extent. The paper also discusses the potential of ICVD in sustainability reports from a user
perspective.
Keywords Intellectual capital, Intangibles, Disclosure, Quality, Sustainability reports, Italy
Paper type Research paper

Introduction
The rise of the knowledge economy and the difficulty in providing adequate
information on intangibles in financial statements have generated a noteworthy debate
in the accounting community on the ability of firms to disclose intellectual capital
information (Holland, 2004; Wyatt, 2005). A number of frameworks have been
developed in literature to stimulate the management, measurement and
communication of intellectual capital (Edvinsson and Malone, 1997; Nahapiet
and Ghoshal, 1998; Schiuma et al., 2008; Ricceri, 2008; Roos et al., 1997; Sveiby,
1997), while a multitude of studies have investigated the frequency of ICVD and its
perceived benefits.
The studies conducted thus far demonstrate that firms disclose little intellectual
capital information, especially through the annual report, and that the low level of
ICVD is due to the absence of an established intellectual capital reporting framework
and a lack of proactive firm behaviour in measuring and externally reporting Journal of Intellectual Capital
Vol. 13 No. 4, 2012
intellectual capital information (Guthrie and Petty, 2000; Striukova et al., 2008). pp. 531-561
r Emerald Group Publishing Limited
A second and correlated aspect that emerges from intellectual capital literature is the 1469-1930
modest attention dedicated to a quality analysis (i.e. characteristics) of the information DOI 10.1108/14691931211276124
JIC disclosed. According to Beattie et al. (2004), quality analysis is important because
13,4 it provides an accurate description of a firm’s characteristics. Brown and
Hillegeist (2007) argued that public documents with high-quality disclosure could
reduce information asymmetry. Previous studies on disclosure quality applied
a researcher-constructed disclosure index where the amount of disclosure is used
as a proxy of disclosure. These studies mainly investigated whether information is
532 disclosed quantitatively or qualitatively, without considering other quality
dimensions of the information (Bozzolan et al., 2003; Beattie et al., 2004; Bukh
et al., 2005).
Following this brief discussion, and in line with Parker’s (2007) and Beattie and
Thomson’s (2010) invitation to continue investigating ICVD, this paper analyses
the content, frequency and quality of ICVD and the changes that took place over
two years (2005 and 2006) in a sample of 37 sustainability reports published by
Italian-listed companies. The choice of examining sustainability reports is supported
by the assertion in intellectual capital literature that different public channels should
be investigated for a more complete analysis of ICVD (Lev and Zambon, 2003;
Striukova et al., 2008), as well as similarities with intellectual capital reports
(Castillo Polo and Gallardo Vázquez, 2008), and their increasing importance as a
useful document to communicate with different sets of stakeholders (Arvidsson,
2010, 2011).
Quality analysis is conducted using a multidimensional scheme (Beattie et al., 2004)
consisting in three main quality disclosure profiles that analyse the type of information
(i.e. whether the information is communicated in quantitative or qualitative terms),
the time dimension (i.e. whether the information is communicated in historical,
non-time-specific or forward-looking terms) and the nature of the information
(i.e. whether disclosure is communicated in financial or non-financial terms).
According to Beretta and Bozzolan (2008), this scheme enables analysing the
information disclosed in a more complete way compared to the simple count of
disclosed items.
In addition, a more detailed intellectual capital framework composed of three levels,
namely, “intellectual capital categories”, “intellectual capital items” and “intellectual
capital indicators”, is used to increase the accuracy of the content analysis, the data
classification and the investigation process (Beattie and Thomson, 2007). Most
previous ICVD studies focused exclusively on the first two level (categories and
items) and hence without providing any information on indicators. So far few
studies use a detailed intellectual capital framework (Abeysekera and Guthrie, 2005;
Bukh et al., 2005; Li et al., 2008), although Beattie and Thomson (2007) stressed the
importance of more extensively defining of intellectual capital information
investigated.
The paper contributes to accounting literature in two keys ways. First, it refines the
analysis of ICVD in sustainability reports using a more accurate framework to
investigate and analyse ICVD compared to previous studies. Second, it provides some
empirical evidence on the quality characteristics of ICVD information and on over time
ICVD analysis in sustainability reports, which have thus far not been investigated. In
so doing, the paper seeks to confirm the potential of sustainability reports in providing
intellectual capital information.
The paper is structured as follows: the first section analyses the characteristics
of ICVD, the second section reviews ICVD disclosure literature while the third
and fourth sections, respectively, discuss the research methodology and content
analysis results. In Section 5, the research findings are analysed and discussed. Intellectual
Section 6 presents a summary of the work, its limitations and future research areas. capital
1. Similarities between ICVD and sustainability voluntary disclosure information
The term voluntary disclosure is commonly thought of as information that is not
required by law or regulations and refers to information that is released in a
non-mandatory subject area or information that goes beyond the minimum 533
requirements in a mandatory area (Williams, 2008). Voluntary disclosure is
considered particularly important in resolving the inability of traditional financial
statements to capture value stemming from firm’s intellectual capital (Arvidsson,
2011). According to Garcı̀a-Meca et al. (2005) ICVD can be disclosed through different
channels. Public channels – such as annual reports and accounts, interim reports,
initial public offerings, web sites, intellectual capital reports and sustainability
reports – are oriented to informing a broad set of stakeholders, while private
channels – such as one-to-one meetings, presentations to financial analysts and
conference calls – are oriented towards stakeholders that are more interested in the
analysis of the firm-value creation process.
ICVD reduces information asymmetry, providing information on the firm’s human,
organisational and relational capital. The literature offers two different perspectives on
the significance of ICVD and intellectual capital reports (Ricceri, 2008). Some authors
assert that ICVD and intellectual capital reports narrate how a company manages its
knowledge resources. In this respect, Bukh et al. (2001, p. 106) claim, “The intellectual
capital report does not reveal the value of the intangible resources of a company. More
than that, it communicates aspects that derive from its knowledge management. The
measures, histories and schemes on the one hand, and the activities in managing
knowledge on the other, constitute integral parts of an intellectual capital statement”.
The second perspective instead affirms that ICVD and intellectual capital reports
inform different stakeholders on a firm’s ability to create economic value (Beattie and
Thomson, 2010). They help shareholders focus on more than short-term returns and to
better understand the investments that are required to ensure long-term firm viability
(Lev, 2001).
Studies have demonstrated that firms provide ICVD information to communicate
their corporate culture, strategy and future direction, to retain and attract
quality employees and customers, and to create more synergetic collaborations with
partners as well as manage the perceptions of the capital market (Beattie and
Thomson, 2010). It supports more efficient decision making (Garcı̀a-Ayuso,
2003; Garcı̀a-Meca and Martinez, 2007), enabling a reduction of equity costs
(Mangena et al., 2010) and an increase in the firm’s stock performance (Dumay
and Tull, 2007).
The literature has also argued that intellectual capital reports, the related ICVD and
sustainability reports have some common characteristics and that the latter could be a
suitable document to report ICVD (Cordazzo, 2005). On this point, Del Bello (2006)
suggested a possible level of integration between intellectual capital reports and
sustainability reports: a weak integration process generating a set of common
indicators between the two types of reports; and a strong integration process between
the two types of reports generating a new, single report. Oliveira et al. (2010) suggested
that intellectual capital report guidelines (Meritum, 2002; Danish Ministry of Science,
Technology and Innovation (DMSTI), 2003) and sustainability report guideline
(Global Reporting Initiative (GRI), 2006), have some similarities in terms of purpose,
JIC elements included, target groups and expected benefits, while Castillo-Polo and
13,4 Gallardo Vázquez (2008) argued for the integration of the two reports for the following
reasons:
. The use of the same methodology to construct the reports. Both reports are
voluntary and use a set of indicators with a narrative section to describe
their objectives. These technical similarities could reduce the high costs of
534 preparing the company voluntary report.
. The elimination of information redundancy to stakeholders caused by the
proliferation of several similar frameworks.
. Better use of social and intellectual capital information for both internal and
external purposes.
. The possibility to demonstrate the interrelationship between intangibles and
corporate social responsibility activities.
. The existence of common and overlapping elements in both reports, especially
in terms of human and relational capital.
. The existence of a common purpose for intellectual capital and sustainability
reports, which are both designed to improve corporate image.
The relationship between intangibles and corporate social responsibility has also
been analysed in strategic management literature. According to Barnett (2007) and
McWilliams et al. (2006), intangibles play an important role in relation to the firm’s
sustainability activities with correlating effects that are able to influence firm value
(Hillman and Keim, 2001). Branco and Rodrigues (2006) theoretically explain how
investments in corporate social responsibility activities generate a set of internal and
external benefits in relation to intangibles. Internal benefits include the development of
new internal human capital resources and capabilities whereas external benefits are
related to stakeholder relations and to the improvement of the firm’s reputation.
Likewise, Surroca et al. (2010) empirically demonstrate the existence of a virtuous
circle between corporate social responsibility investments, intangibles and financial
performance.
In conclusion, although the sustainability report is designed to communicate
how a firm’s actions meet the social and environmental expectations of stakeholders by
providing financial and non-financial information of the social, environmental and
financial results obtained, it should also contain some information in relation to
intellectual capital since, as documented by previous analyses, a strict relationship
exists between intellectual capital and sustainability activities.

2. Previous ICVD studies and the positioning of this study

ICVD has previously been investigated in several types of documents (Table I) and in
many different ways. ICVD has been analysed in static (Guthrie and Petty, 2000;
Brennan, 2001; Bozzolan et al., 2003; Goh and Lim, 2004; Oliveira et al., 2006; Sujan and
Abeysekera, 2007; Steenkamp, 2007), longitudinal (Sonnier et al., 2008; Campbell
and Ridhuan Abdul Rahman, 2010) and internationally comparative forms
(Vergauwen and van Alem, 2005; Bozzolan et al., 2003; Guthrie et al., 2007) in a large
number of different countries. The results demonstrate that ICVD is mainly reported
in qualitative terms (Guthrie et al., 2007), while the longitudinal studies reveal an
increasing amount of information over time (Campbell and Ridhuan Abdul Rahman,
 Media Main results in terms of ICVD frequency,
Authors Country Year/s Sample used Type of analysis characteristics and variation over time

Guthrie and Petty (2000) Australia 1998 20 AR Frequency of ICVD Extremely low frequency with RC (40 per cent),
OC (30 per cent), HC (30 per cent)
Brennan (2001) Ireland – 11 AR Frequency of ICVD Extremely low frequency with RC (49%), OC
(29%), HC (22%)
April et al. (2003) South Africa – 20 AR Frequency of ICVD Low frequency with RC (40.9%), OC (30.1%), HC
(29.5%)
Goh and Lim (2004) Malaysia 2001 20 AR Frequency of ICVD ICVD is expressed mainly in qualitative form.
Medium frequency with RC (41.4%), OC (36.4%),
HC (21.9%)
Abeysekera and Sri Lanka 1999-2000 30 AR Frequency and Increase in of frequency of RC and HC. RC is the
Guthrie (2005) variation of ICVD most reported category followed by HC and OC
in both years.
Vandemaele et al. (2005) The Netherlands, 1998, 60 AR Frequency of ICVD Extremely low but increasing frequency of ICVD
Sweden and UK 2000, 2002 over the years for Netherlands and UK
companies. RC is the most reported category
followed by OC
Guthrie et al. (2007) Australia and 2002 150 AR Frequency and type ICVD is expressed mainly in qualitative form. RC
Honk Kong of ICVD is the most reported category in both countries.
Sujan and Abeysekera Australia 2004 20 AR Frequency and type ICVD is expressed mainly in qualitative form.
(2007) of ICVD Low frequency with RC (48%), OC (31%), HC
(21%).
Steenkamp (2007) New Zealand 2004 20 AR Frequency of ICVD Medium frequency with RC (36%), OC (11%), HC
(53%)
Campbell and Ridhuan UK 1978-2008 1 AR Longitudinal and Overall increase in ICVD over the 31 years with a
Abdul Rahman (2010) quality analysis of particular emphasis on RC
ICVD

(continued)
information
capital
Intellectual

empirical ICVD studies

535

Table I.
Selected previous
 JIC
13,4

536

Table I.
Media Main results in terms of ICVD frequency,
Authors Country Year/s Sample used Type of analysis characteristics and variation over time

Striukova et al. (2008) UK – -– Multiple Frequency and type Companies use different types of reports for
reports of ICVD ICVD, which is expressed mainly in qualitative
form. RC is the most reported category followed
by OC and HC
Bukh et al. (2005) Denmark 1991-2001 68 IPO prospectus Presence, variation and factors that influence
ICVD
Presence and increasing
of ICVD for all
categories with strategic
statements (27.9%),
customer (27.5%) and
R&D (22.7%) as the
most reported categories
Sing and Van der Zahn Singapore 1997-2006 444 IPO prospectus Quantitative disclosure index to identify factors
(2008) that influence ICVD
Presence and increasing
of ICVD for all
categories with
particular emphasis on
employees and strategic
statements

Notes: AR, annual report; HC, human capital; Rc, relational capital; IPO, initial public offering; OC, organisational capital
2010). Annual reports, the most analysed documents, show a low level of ICVD that Intellectual
does not satisfy user information needs (Petty et al., 2008; Sakakibara et al., 2010), and capital
consequently cannot be considered as a good proxy of the overall level of intellectual
capital information communicated by firms (Striukova et al., 2008; Beattie and information
Thomson, 2010).
More specifically, previous studies analysed the presence, frequency and
determinants of ICVD in sustainability reports. Cordazzo (2005) analysed the 537
contents of 83 sustainability reports of Italian companies and found ample information
on employee training, customer satisfaction and suppliers. Del Bello (2006) analysed
the frequency of disclosure of intangible resources in local government sustainability
reports. Pedrini (2007) found some similarities between sustainability and intellectual
capital reports in relation to human capital information. Striukova et al. (2008)
analysed several different reports published by UK companies in four distinct sectors
and found that sustainability reports had the lowest incidence of ICVD.
Finally, Oliveira et al. (2010) used a voluntary disclosure index to analyse the
frequency, pattern and determinants of ICVD in sustainability reports. They
demonstrated a high incidence of such disclosure and argued that the enhancement of
legitimacy and reputation are potential incentives to engage in this practice. These
studies give a first and good overview of ICVD in sustainability reports but they
evidence a gap in the analyses of the quality of disclosure, intellectual capital
indicators and changes in disclosure over time.
Furthermore, quality disclosure analysis has also been conducted to a limited extent
only (Campbell and Ridhuan Abdul Rahman, 2010). Previous studies almost
exclusively analysed whether ICVD is expressed in quantitative or qualitative terms.
Alternative studies constructed a quantity disclosure index used as a proxy of
disclosure quality to test the relationship between ICVD and firm characteristics
(Bozzolan et al., 2003; Bukh et al., 2005). To date, no previous studies have
simultaneously investigated different quality aspects such as the time dimension and
the nature of the information disclosure. In this respect, Guthrie et al. (2004) asserted,
“studying the quality of disclosure [y] is the approach most likely to yield meaningful
results. This approach not only provides a description of the disclosure practises of
organisations, but also indicates the key issues that need to be focused on in
subsequent in-depth investigations on how organisations identify, measure, and report
their IC”. In addition, Brown and Hillegeist (2007) argued that good quality disclosure
reduces information asymmetry and disincentivises the search for private information.
Following this discussion, the paper aims to contribute to the analyses of ICVD
in sustainability reports by analysing the content, frequency and quality of ICVD
and the changes that took place over two years (2005 and 2006) in a sample of 37
sustainability reports published by Italian-listed companies.

3. Research methodology
3.1 Defining the intellectual capital framework
In broad terms, intellectual capital can be defined as the intellectual, or knowledge-
base, resources of and organisation. It is the sum of all knowledge and knowing
capabilities that can be utilised to give a competitive advantage to a company
(Youndt et al., 2004). Over the last decade different frameworks were developed
both from academic and practitioner’s communities to better conceptualise its
importance (Kujansivu, 2008; Ricceri, 2008; Schiuma et al., 2008) and make possible
some measurement of it as well (Youndt et al., 2004).
JIC While there are some differences across these frameworks in terms of
13,4 conceptualisation and categories, there is a great deal of convergence about the key
role that intellectual capital has for a company (Kujansivu, 2008; Schiuma et al.,
2008). Furthermore, all the frameworks recognised that intellectual capital is a
multidimensional construct that resides at various level (individual, network and
organisational) and that includes both the knowledge held by the individuals and
538 the knowledge stored within organisational database, business processes, systems
and relationships.
Following an accounting-based definition, some authors have argued that a
company’s intellectual capital can be defined as the difference between the value of its
tangibles net assets and its market capitalisation (Lev, 2001) even if this difference
is quite problematic, as the market value often fluctuates for reasons that have little
to do with the company’s operations (Garcı̀a-Ayuso, 2003). In addition such definition
does not help in the recognition or identification of specific sub-categories of
intellectual capital and therefore it is considered rather reductive of intellectual capital
meaning (Striukova et al., 2008).
From a non-accounting perspective and starting from Edvinsson and Malone’s
(1997) definition, intellectual capital is viewed as being composed of two primary
categories: human capital (i.e. the employees’ education, skills, values and experiences)
and structural capital (i.e. the embodiment, empowerment and supportive
infrastructure of human capital). Structural capital is then divided into two
sub-categories: organisational capital (i.e. the systems, tools and operating philosophy
that speed the flow of knowledge through the organisation) and customer capital
(i.e. the relationship between a company and its customers).
Stewart (1997) identifies intellectual capital as composed of human capital and
structural capital, but place customer capital on the same level of structural capital
(rather than as a sub-category). Bontis (1998), instead, introduces the concept of
relational capital as a more complete version of customer capital that include the
value of all relationships between a company and external actors, including those
of customers. This concept of relational capital is substantially identical to what
organisation theory refers as social capital (Nahapiet and Ghoshal, 1998).
Brooking (1996, p. 12) defines intellectual capital as “[y] combined intangible assets
which enable the company to function” and suggests that the analysis of
intellectual capital should include four categories: market assets, human-centred
assets, intellectual property right assets and infrastructure assets. Also Roos et al. (1997,
p. 19), which defines intellectual capital as “all non-monetary and non physical resources
that are fully or partly controlled by the organisations and that contribute
to organisation’s value creation”, identifies four possible intellectual capital categories,
namely: human capital, business process capital, business renewal and development
capital, and customer relationship capital.
Sveiby (1997) divides intellectual capital into three main categories: employee
competence (or human capital), internal structures (or organisational capital) and
external structures (relational capital). Employee competence involves the capacity
to act in a wide variety of situation to create both tangible and intangible assets.
Specifically, it refers to human resources and includes general employee’s
characteristics such as education, work-related knowledge, competencies, average
age, etc. Internal structures indicate the infrastructure, processes and databases of the
organisation that enable the human capital to function. In addition, it includes,
amongst other things, the organisation’s image and culture. Finally external structures
concerns the organisation’s relationships with different external stakeholders and Intellectual
includes elements such as customers, suppliers, business collaborations, franchising capital
agreements and so forth.
Schiuma et al. (2008) introduces the concept of “Knoware Tree” which distinguishes information
two main categories of intellectual capital: the category of intangibles related to a
company’s stakeholders (stakeholder knowledge assets) and the category of
intangibles related to organisation infrastructure (structural knowledge assets). The 539
first category reflects the internal and external actors of a company, while the second
category reflects all the elements at the basis of the process of an organisation.
Both categories are then divided in other sub-categories. Stakeholder knowledge assets
are divided in “wetware” and “netware” assets that contain intangibles such as human
capital and internal and external relationships while structural knowledge assets
are divided between “hardware” and “software” that contain organisational assets that
embed strategic know-how that have a soft nature.
Sveiby’s classification is the most frequently used framework for empirical ICVD
content analysis (Striukova et al., 2008). According to Beattie and Thomson (2007),
a more detailed intellectual capital framework is important to enhance the
completeness and validity of ICVD content analysis and to improve the
interpretation of findings. In contrast to prior research that used an intellectual
capital framework consisting of two levels (categories and items), this study uses
a more detailed intellectual capital framework that is composed of three levels: “IC
categories”, “IC items” and “IC indicators”. Sveiby’s classification is applied at the
level of “IC categories”. The selection of IC items was based on the analysis of the
studies that use Sveiby’s classification (Abeysekera and Guthrie, 2005; Guthrie et al.,
2007), studies that refined intellectual capital items (Roslender et al., 2006), and those
that summarised previous intellectual capital frameworks (Beattie and Thomson, 2007)
(Figure 1). Furthermore, a more accurate sub-classification was undertaken for each
of the 16 intellectual capital items previously identified. According to Gray et al. (1995),
an accurate definition of the subcategories of content analysis allows more precise
identification of the type of information to be analysed in the document, which reduces
the implicit subjectivity of this research method. Consequently, through an analysis
of studies that used more detailed intellectual capital frameworks (Bukh et al., 2005;
Li et al., 2008), 66 intellectual capital indicators were identified and divided into the
16 intellectual capital items[1].

IC framework

Human capital Organisational capital Relational capital

Employees characteristics Intellectual property Distribution channels

Employees training Information and Business collaborations
Employees skills networking system
University and research
Employees wellness Company culture centre collaborations
and management
Company reputation
philosophy
Customers Figure 1.
Process management
Suppliers The IC framework (IC
Research and categories and IC items)
development Financial relationships
JIC 3.2 Beattie, McInnes and Fearnley’s quality scheme
13,4 Beattie et al. (2004) developed an interesting scheme to analyse disclosure quality.
It identified three quality dimensions of information:
(1) type of measure, which analyses quantitative vs non-quantitative information;
(2) nature, which analyses financial vs non-financial information; and
540 (3) time, which analyses whether the information disclosed is expressed in a
historical, non-time-specific or forward-looking way (Figure 2).
It also enables analysing the data in four different ways. A one-way analysis separately
investigates the findings for each of the three single dimensions discussed above. The
two-way analysis combines two of the three dimensions and identifies three
subsections of quality (time  nature, time  type of measure and nature  time of
measure). The three-way analysis combines all three categories to provide the deepest
level of quality analysis (time  nature  type of measures). The fourth level is
obtained by combining the three-way analysis with the categories and items analysed
(see Table VII). Moreover, such scheme defines a composite index to construct
a synthetic representation of disclosure quality. As emphasised by Beretta and
Bozzolan (2008), such scheme offers a complete, multidimensional and rich descriptive
profile of the firm’s disclosure quality rather than a mere count of the items disclosed.
In this study, one-way analysis and the fourth level of the scheme were applied
to investigate the quality of intellectual capital categories and intellectual capital items
in the sustainability reports. The two- and three-way analyses after some preliminary
tests were excluded since they were considered unable to add value to the quality
analysis while the composite disclosure index was not applied as it relates disclosure
quality to other variables (Beattie et al., 2004, p. 230) and therefore does not pertain to
the research questions addressed here. Instead, for the indicators, only the frequency of
disclosure was calculated, without applying the scheme.
In addition, a two-tailed paired sample t-test was used to test the difference
between the level of ICVD for 2005 and 2006. The t-test was used for each component
of the three categories (human capital, organisational capital and relational capital), for
the total amount of ICDV, as well as for each information quality dimension (type of
measure, nature and time). The two-tailed t-test has a significance level of po0.05.

3.3 Sample selection

The non-random sample consists of 37 sustainability reports published by Italian
firms listed on the Italian Stock Exchange. The analysis was performed over two years
(2005 and 2006), for a total of 74 sustainability reports. Attention was focused on listed
firms because, unlike small and medium enterprises, only these use formal
sustainability tools such as sustainability reports or ethical codes to provide

Voluntary quality analysis

Type of measure Nature dimension Time dimension

Figure 2. Historical
Quantitative Financial
Beattie, McInnes and
Fearnley’s scheme Forward looking
Qualitative Non-financial
Non-time specific
corporate social responsibility information to stakeholders (Perrini et al., 2007). For all Intellectual
the listed firms a web site analysis of the investor relations section and, if present, capital
of the sustainability section, was conducted to identify those that published a
sustainability report. Furthermore, the annual reports were download and screened to information
determine if a sustainability report was attached to them and in five cases, the
sustainability report was extracted and analysed as a stand-alone report (Table II).
541
3.4 Content analysis of sustainability report sections
As explained by Beattie and Thomson (2007), to increase the transparency of the ICVD
content analysis process, the researcher should indicate which sections of the
document were analysed. In this paper, the sections of the sustainability report
analysed concern human resources, economic and financial results, corporate identity,
supplier and customer relationships. Sections related to corporate governance and the
environment were otherwise excluded. Corporate governance was not included
because other specific studies have already analysed the relationship between
corporate governance and ICVD (Li et al., 2008) and because this information is
mandatory for listed companies (albeit not mandatory in sustainability reports) and
was therefore considered outside of the scope of this research. Environmental sections
were excluded since dedicated and well-developed literature already exists on
environmental disclosure and its specific issues and topics ( Jose and Lee, 2007).

3.5 Content analysis process

The research is based on content analysis, which can be defined as a research
technique for making replicable and valid inferences from texts (or other meaningful
matter) to the contexts of their use (Krippendorff, 2004). This research used the Weber
(1985) scheme to provide the most transparent content analysis process possible
(Beattie and Thomson, 2007). Weber’s scheme indicates the steps to follow to develop
and test a coding system in order to achieve a satisfactory level of reliability (i.e.
different people code the text in the same way over a period of time) and validity (i.e. the
variables generated from the classification procedure represent their intended
objective) of the results. The coding system is at the heart of content analysis since it
specifies the information to search and how this should be classified.
A good coding system enables researchers to identify the important categories and
presents the necessary conditions for the method’s objectivity. Table III describes each
step of the research according to the Weber scheme for content analysis (Table III).

4. Results of ICVD content analysis

4.1 ICVD frequency analysis
The content analysis confirmed the presence of ICVD in sustainability reports. The
two-year study indicates that companies reported ICVD with increasing frequency
over the two years. Human capital was the most reported category followed by

Number of companies Number of reports

Table II.
Financial 18 Sustainability standalone report 32 Sectors classification
Manufacturing 8 Sustainability report into annual report 5 and typology of
Service 11 sustainability reports
JIC Steps
13,4
First step: defining the
recording unit
542
Second step: defining the
categories
Third step: test coding of a
sample of text
Fourth step: assessing
reliability
Fifth step: revising coding
rules
Sixth step: Repeating Steps
3-5 until reliability is
satisfactory
Seventh step: coding all text
Eighth step: assessing
achieved reliability
Table III.
Description of the
research process Note: aFor a discussion about photographs content analysis see Steenkamp (2007)
Description
The recording units were the sentences, graphics, charts and tables.
The units of analysis were consistent for both coding and counting
(Milne and Adler, 1999; Unerman, 2000; Campbell and Ridhuan Abdul
Rahman, 2010). The photographs were excludeda. Few ICVD studies
have analysed photographs, and their analysis is considered too
ambiguous and requires content analysis rules that are too complex
(Steenkamp, 2007)
The IC framework was composed of three hierarchical levels
(intellectual capital categories, intellectual capital items, and
intellectual capital indicators) to ensure the completeness and validity
of the content analysis. The content analysis rules were defined in this
phase (Appendix)
Two of the authors (coders) performed the content analysis, and the
coding training was provided by the other two authors (trainers). The
initial training consisted of discussing the research objectives, the
potential risks linked with ICVD content analysis, and our content
analysis rules. To test the intellectual capital framework and the rules,
content analysis was performed on a sample of six sustainability
reports. As in several prior ICVD research studies, the practise of
counting and transcribing the instances of disclosure was adopted to
facilitate the comparison of findings. To classify ICVD, two different
schemes were given to each coder. The first one was the
multidimensional scheme used to classify intellectual capital items
according to their quantity and quality profile (see Table V). The
second scheme was used to classify intellectual capital indicators (see
Table VI). Both schemes were used for each company
The content analysis of the initial sampling of the six sustainability
reports showed some ambiguities between the two coders in the
identification of the intellectual capital items and intellectual capital
indicators
The intellectual capital framework was modified after a discussion
between the coders and trainers
Three weeks after the first content analysis, content analysis was
performed again on the same six sustainability reports by the same
coders to test the new intellectual capital framework. Krippendorff
(2004) identified three types of reliability: reproducibility, accuracy and
stability. The issue of reproducibility, which ensures that the same data
can be obtained by independent coders using the same instructions for
coding in different locations and at different times, was addressed.
Krippendorff’s a was calculated for the IC items (0.82), the time
dimension (0.83), the nature dimension (0.89) and the type-of-measure
dimension (0.86). For all four dimensions, the level of Krippendorff’s a
was considered acceptable
The two coders performed content analysis on the other 68
sustainability reports in the sample
At the end of the process, the trainers compared the findings of the
sample of 68 sustainability reports with the initial sample findings
composed of 6 sustainability reports. Moreover, on a random sample of
six reports, the Krippendorff’s a was re-calculated and showed the
following results: IC items (0.86), time dimension (0.86), nature
dimension (0.92) and type-of-measure dimension (0.89)
relational capital and organisational capital in both years. Tables IV-VI present the Intellectual
descriptive statistics of the IC categories and items. capital
In the human capital category, “employee wellness” was the most reported item for
both years, followed by “employee training”. Instead, “description of training programs information
and activities” and “staff health and safety” were the two most reported human capital
indicators, followed by “employee agreements” and “staff breakdown by gender” in
2005 and by “rate of staff turnover” and “employee agreements” in 2006. 543
In the relational capital category, “customers” and “distribution channels” were the
two most reported items in both years while the least reported items were “university
and research centre collaborations” in 2005 and “business collaborations” in 2006.

Total frequency SD
2005 2006 % of variation 2005 2006

Employees characteristics 288 358 þ 24.3 4.76 4.91

Employees training 489 475 2.9 7.51 7.31
Employees skills 92 74 19.6 1.40 1.43
Employees wellness 697 761 þ 9.2 8.59 10.28
Human capital (HC) 1,566 1,668 þ 6.5 16.26 17.17
Intellectual property 175 98 44 6.86 6.15
Information systems 107 72 32.8 2.87 1.99
Corporate culture and management philosophy 273 360 þ 31.9 5.30 7.12
Management processes 289 455 þ 57.4 6.43 10.11
Research and development 130 135 þ 3.8 4.82 5.83
Organisational capital (OC) 974 1,120 þ 15 14.45 17.38
Distribution channels 243 268 þ 10.3 7.08 9.22
Business collaborations 94 59 37.2 3.59 3.05
University and research centre collaborations 87 73 16 2.72 3.09
Company reputation 141 155 þ 9.9 4.17 4.37
Customers 561 682 þ 21.6 10.65 10.79
Suppliers 215 212 1.4 4.87 4.84
Financial relations 201 174 13.4 3.14 3.42 Table IV.
Relational capital (RC) 1,542 1,623 þ 5.2 23.74 24.12 Descriptive statistics of IC
Total ICVD 4,082 4,411 þ8 43.31 46.94 categories and IC items

% variance
2005 2006 Total 2005/2006 SD 2005 SD 2005

One way analysis

Time dimension
Historical (H) 796 917 1,713 15.2 13.27 16.64
Non-time specific (NTS) 3,185 3,358 6,543 5.4 35.41 34.94
Forward-looking (FL) 101 136 237 34.7 4.03 4.03
Nature
Financial (F) 475 508 983 6.9 9.98 9.31
Non-financial (NF) 3,607 3,903 7,510 8.2 38.37 41.52
Type of measure Table V.
Quantitative (Q) 2,415 2,804 5,219 16.1 29.85 35.95 Distribution of ICVD per
Non-quantitative (NQ) 1,667 1,607 3,274 3.6 24.85 23.19 quality and year
JIC Total Variance
13,4 2005 2006 %

Human capital
Employees characteristics
Staff breakdown by age 43 46 7.0
544 Staff breakdown by seniority 28 36 28.6
Staff breakdown by gender 68 67 1.5
Staff breakdown by job function 60 63 5.0
Rate of staff turnover and comments on change in number of employees 57 98 71.9
Employee efficiency index 32 48 50.0
Employees training
Number of education programmes 23 5 78.3
Description of training programmes and activities 409 408 0.2
Education and training expenses 57 62 8.8
Employees skills
Staff breakdown by education 57 45 21.1
Competence development programme 35 29 17.1
Employees wellness
Staff health and safety 187 243 29.9
Absence 29 40 37.9
Pensions 13 7 46.2
Career opportunities 34 42 23.5
Value added per employee 61 64 4.9
Insurance police 23 15 34.8
Recruitment police 21 23 9.5
Employees agreements 92 74 19.6
Employee company social activity 65 69 6.2
Employee satisfaction 37 30 18.9
Diversity and equal opportunities 50 58 16.0
Employees litigations and legal actions 30 30 0.0
Benefits 55 66 20.0
Organisational capital
Intellectual property
Patents, copyrights and trademarks 175 99 43.4
Information and networking systems
IT systems 57 58 1.8
IT expenses 4 9 125.0
Description of IT facilities 46 5 89.1
Company culture and management philosophy
Corporate culture statement 184 185 0.5
Company strategy description 89 175 96.6
Processes management
Quality standards 80 93 16.3
Environmental standards 52 41 21.2
Performance measurement systems 47 127 170.2
Incentive and remuneration systems 45 66 46.7
Risk management 41 61 48.8
Communication systems 24 66 175.0
Research and development
Statements of policy, strategy and/or objectives of R&D activities 102 107 4.9
R&D investments 19 17 10.5
Patents and patents pending 9 11 22.2
Table VI.
IC indicators over time (continued)
 Total Variance
Intellectual
2005 2006 % capital
information
Relational capital
Distribution channels
Description and typology 107 98 8.4
Number and geographicn diversification 84 105 25.0 545
Economic performance 52 65 25.0
Business collaborations
Alliances and partnerships 86 58 32.6
License and franchising agreements 8 1 87.5
University and research centre collaborations
Typology and number 81 65 19.8
University and research centre donations 6 8 33.3
Company reputation
Financial reputation 62 66 6.5
Social reputation 31 28 9.7
Environmental reputation 2 6 200.0
Brand Image 46 55 19.6
Customers
Typology and number of customers 90 154 71.1
Sales breakdown by customer 21 22 4.8
Annual sales per segment or product 70 106 51.4
Description of customers’ involvement 45 78 73.3
Customer satisfaction 127 100 21.3
Market share 8 20 150.0
Market share by segment/product 54 61 13.0
Dependence on key customers 5 6 20.0
Geographic diversification 58 62 6.9
Customers litigations and legal actions 83 73 12.0
Suppliers
Number of suppliers and geographic diversification 89 83 6.7
Contractual relationship and supplier policies 72 92 27.8
Certified supplier quality 31 18 41.9
Supplier satisfaction and retention 23 19 17.4
Financial relationships
Meetings with financial stakeholders 123 96 22.0
Value added to investors and shareholders 78 78 0.0 Table VI.

Among the relational capital indicators, the most reported were “customer
satisfaction”, “meeting with financial stakeholders” and “description and typology
of distribution channels” in 2005, while in 2006, the first relational capital indicator
was “typology and number of customers” followed by “annual sales per segment
or product” and by “number and geographic diversification of distribution
channels”.
In the organisational capital category, “corporate culture and management
philosophy” was the most reported item, followed by “management processes” in 2005;
in 2006 these two items exchanged positions. The most reported organisational capital
indicator in both years was “corporate culture statements”, followed by “patents,
copyrights and trademarks” in 2005 and by “company strategy description” and
“performance measurement systems” in 2006.
JIC 4.2 ICVD frequency over-time analysis
13,4 The ICVD analysis over the two years showed an 8 per cent overall increase in the rate
of disclosure. Organisational capital showed the greatest increase (þ 15 per cent),
followed by human capital (þ 6.5 per cent) and relational capital (þ 5.2 per cent).
However, the intellectual capital items varied in the rate of disclosure. In the
organisational capital category, intellectual property disclosure decreased by
546 44 per cent while disclosure of the management process increased by 57.4 per cent.
Also, the intellectual capital items related to human capital and relational capital
showed similar trends, as reported in Table IV. Concerning the indicators, “staff
turnover” (þ 71.9 per cent), “performance measurement systems” (þ 170.2 per cent)
and “typology and number of customers” (þ 71.1 per cent) are examples of
indicators with a high rate of growth, while other indicators such as “description of IT
facilities” (89.1 per cent), “patent, copyright and trademarks” (43.4 per cent) and
“customers satisfaction” (21.3 per cent), showed a negative change in frequency
(Table VI).

4.3 ICVD quality analysis: frequency and over-time analysis

Multidimensional analyses conducted in line with the Beattie et al. (2004) scheme
provided details on ICVD quality, as presented in Table V. Overall, ICVD was
communicated principally in non-financial, quantitative and non-time-specific terms in
both 2005 and 2006. In the time orientation dimension, the majority of information
was disclosed in a non-time-specific way for both years, with a higher level of historical
information and limited forward-looking information. In this area, there is an
increasing trend over the years for all three sub-dimensions, in particular, for forward-
looking information (þ 34.7 per cent).
Conversely, in the nature of information dimension, an imbalance in the disclosure
of financial and non-financial information was found and the latter was reported to a
greater extent in both years. Finally, in the type of measures dimension, disclosure can
be considered more balanced between quantitative information (þ 16.1 per cent)
and non-quantitative information (3.6 per cent). Over the years forward-looking
information shows the highest increase (34.7 per cent), followed by quantitative
information (16.1 per cent) and historical information (15.2 per cent) while
non-quantitative information shows a slight decrease (3.6 per cent).

4.4 ICVD quality analysis: interaction between intellectual capital items and quality
dimensions
When the intellectual capital items were studied alongside quality dimensions, as
presented in Table VII, the findings show that human capital was primarily
communicated in non-time-specific/non-financial/quantitative and in non-time-specific/
non-financial/non-quantitative terms. Among the human capital items, “employee
wellness” was primarily expressed in non-time-specific/non-financial/non-quantitative
and in non-time-specific/non-financial/quantitative terms, while “employee training”
was primarily expressed in non-time-specific/non-financial/quantitative and
non-time-specific/non-financial/non-quantitative terms. In the relational capital
category, information was primarily communicated in non-time-specific/non-financial/
quantitative and non-time-specific/non-financial/non-quantitative terms, as for human
capital.
Regarding the relational capital items, “customers” and “distribution channels”
were primarily reported in non-time-specific/non-financial/quantitative and
 H/NF/ NTS/NF/ FL/NF/ H/F/ NTS/F/ FL/F/ H/NF/ NTS/NF/ FL/NF/ H/F/ NTS/F/ FL/F/
Code Year NQ NQ NQ NQ NQ NQ Q Q Q Q Q Q

Human capital
AA Employees characteristics 2006 1 10 0 0 0 0 111 221 5 5 5 0
2005 0 4 0 0 0 0 94 176 2 6 6 0
AB Employees training 2006 0 147 2 0 0 0 76 193 3 20 33 1
2005 3 168 6 0 0 0 73 181 2 20 35 1
AC Employees skills 2006 0 23 1 0 0 0 17 33 0 0 0 0
2005 0 25 2 0 0 0 21 42 2 0 0 0
AD Employees wellness 2006 0 242 0 0 0 0 145 262 4 43 65 0
2005 6 268 12 0 0 0 122 197 0 35 57 0
Total 2005 and 2006 10 887 23 0 0 0 659 1,305 18 129 201 2
Organisational capital
BA Intellectual property 2006 0 47 0 0 0 0 0 3 0 15 33 0
2005 2 100 0 0 0 0 3 7 0 14 49 0
BB Information and networking systems 2006 0 48 3 0 0 0 4 7 0 4 5 1
2005 5 83 7 0 0 0 3 5 0 1 2 1
BC Company culture and management
philosophy 2006 0 275 74 0 0 0 0 4 5 0 0 2
2005 1 246 25 0 0 0 0 1 0 0 0 0
BD Process management 2006 6 213 10 0 0 0 73 127 10 7 8 1
2005 29 152 16 0 0 0 33 48 2 4 5 0
BE Research and development 2006 0 98 0 0 0 0 3 15 0 7 12 0
2005 0 96 0 0 0 0 3 12 1 7 10 1
Total 2005 and 2006 43 1,358 135 0 0 0 122 229 18 59 124 6
Relational capital
CA Distribution channels 2006 0 36 1 0 0 0 41 133 2 18 35 2
2005 1 36 3 0 0 0 35 112 3 20 32 1
CB Business collaborations 2006 5 51 0 0 0 0 0 1 0 0 2 0
2005 1 78 0 0 0 0 1 6 0 0 8 0
(continued)
information
capital
Intellectual

dimensions
items and quality
Interactions between IC
547

Table VII.
 JIC
13,4

548

Table VII.
H/NF/ NTS/NF/ FL/NF/ H/F/ NTS/F/ FL/F/ H/NF/ NTS/NF/ FL/NF/ H/F/ NTS/F/ FL/F/
Code Year NQ NQ NQ NQ NQ NQ Q Q Q Q Q Q

CC University and research centre

collaborations 2006 0 63 0 0 0 0 2 6 0 0 2 0
2005 0 78 1 0 0 0 1 2 0 0 5 0
CD Company reputation 2006 2 78 0 0 0 0 23 50 1 1 0 0
2005 1 45 0 0 0 0 19 76 0 0 0 0
CE Customers 2006 0 91 0 0 1 0 155 362 1 26 44 2
2005 3 74 8 0 0 0 125 302 2 17 30 0
CF Suppliers 2006 0 61 3 0 0 0 40 86 0 8 14 0
2005 2 55 2 0 0 0 32 93 0 12 19 0
CG Financial relationships 2006 0 15 0 0 0 0 18 53 2 41 45 0
2005 0 22 1 0 0 0 21 80 0 33 44 0
Total 2005 and 2006 15 783 19 0 1 0 513 1,362 11 176 280 5
historical/non-financial/quantitative terms. By contrast, the organisational capital Intellectual
category was mainly communicated in non-time-specific/non-financial/non- capital
quantitative terms due to the substantial weight of item “company culture and
management philosophy” in overall organisational capital disclosure. The item “R&D information
activity” was primarily expressed in non-time-specific/non-financial/non-quantitative
terms, while “intellectual property”, which shows a good level of disclosure, was
communicated in non-time-specific/financial/quantitative terms. 549
5. Discussion
The results confirm the presence of ICVD in the sustainability reports of Italian
companies and their capacity to provide intellectual capital information. Unlike in
annual report studies, human capital resulted as the most disclosed category. This high
level of this type of information indicates that the human capital relationship is an
essential theme in sustainability reports and that human capital is viewed as an asset
with disclosure used to build mutual trust and good relationships with employees
(Perrini, 2006; Beattie and Thomson, 2010). Moreover, the widespread presence of
human capital highlights the narrow view of traditional financial reporting of human
capital information and its inadequacy in disclosing a key intangible asset of the firm’s
success ( Johanson, 2003).
The wide and detailed range of human capital information provided by
sustainability reports demonstrates a broader representation of what companies do
to manage and leverage a key asset of firm success (Colbert, 2004). As evidenced
by Wyatt and Frick (2010), both human capital information and human capital
investment decisions are linked to firm performance, reputation and information
asymmetry and firms should therefore communicate this kind of information to
increase their transparency (Cormier et al., 2009). However, there are still some barriers
to accurately disclosing this kind of information such as the absence of an official
framework of standards, the fear of disclosing competitively sensitive information and
the uncertainty of the ability of stakeholders to understand this type of information
(Stiles and Kulvisaechana, 2003), which negatively impacts on the level of information
provided by firms.
From a stakeholder perspective, this information could be collected and used, over
and above the information acquired from other company documents, to complete an
analysis of firm competitiveness and long-term performance (Mangena et al., 2010;
Gamerschlag and Moeller, 2011). For instance, Lim et al. (2010) analysed the
importance given to 15 human capital indicators in the investment decision-making
processes of fund managers. Nine of these indicators, and specifically “staff
satisfaction index”, “ratio of value added per employee”, “number of percentage of
full-time”, “part-time, contract or temporary staff ”, “quarterly, half-year and yearly
staff turnover”, “average years of experience”, “average age of management and
operational staff ”, “average years of service with the company”, “average educational
level of workforce at each functional level” and finally “workforce competency profile”,
were found in the sample of sustainability reports analysed in this study. It was also
observed that employees are interested in reading some sections of the sustainability
report (McInnes et al., 2007), even if they do not use it to acquire information for their
decision-making processes (Riise Johansen, 2010).
Relational capital disclosure is also communicated through sustainability reports.
Similarly to many annual report studies, “customers” is the most disclosed IC item,
followed by “distribution channels” (Steenkamp, 2007). Some of the intellectual capital
JIC items disclosed – such as “distribution channels”, “business collaborations”,
13,4 “university and research centre collaborations” – and some customer indicators are
not traditional sustainability-related issues (Perrini et al., 2007), and hence their
presence emphasises that firms use sustainability reports to communicate a broad set
of information on intangibles to better demonstrate and describe their network of
relations.
550 Finally, organisational capital was the least reported category. The disclosure of
organisational capital items such as “corporate culture and management philosophy”
and some organisational capital indicators such as “management process”, “research &
development”, “intellectual property” and “information and networking systems” are
not directly linked to sustainability themes. Therefore, the presence (albeit poor) of this
type of information confirms that sustainability reports disclose also organisational
capital information. Concerning research and development items and indicators, it is
noted that the low level of disclosure could be influenced by the risk of releasing
information that could benefit competitors (Garcı̀a-Meca et al., 2005).
The ICVD quality analysis revealed somewhat different findings with respect to
previous studies. The first is the strong incidence of quantitative information
as compared to qualitative information, especially for human capital and relational
capital, as presented in Table VIII. In terms of organisational capital, it is
acknowledged that there are some constraints in quantifying some intangible items
and indicators, such as corporate culture and management philosophy, which therefore
reduces the level of quantitative information. Previous studies show a tendency to
communicate mainly qualitative information. Guthrie et al. (2007) found that “nearly
90% of IC information disclosed is expressed in discursive rather than numerical
terms,” while Striukova et al. (2008) showed that, on average, 80 per cent of disclosure
was expressed in a narrative discursive form. Similarly, Oliveira et al. (2006) showed
that Portuguese companies disclosed 81.1 per cent of their information in a qualitative
form. This tendency was confirmed by Sujan and Abeysekera (2007), who showed that
73 per cent of intellectual capital information was reported in qualitative terms.
The high rate of quantitative information is directly related to sustainability report
guidelines, such as the GRI Guidelines that emphasise the importance of using
indicators, tables and graphs to show results in a more objective and concrete way in
order to enable stakeholders to gain a better understanding of the firm. In the near
future, companies should make an effort to quantitatively express as much information
as possible so as to reduce information asymmetry between firms and stakeholders
(Cormier et al., 2009). In addition quantitative information enables benchmarking
comparisons without being influenced by rhetoric discourses (Boesso and Kumar,

Human capital Organisational capital Relational capital

2005 % 2006 % 2005 % 2006 % 2005 % 2006 %

Historical 8.1 8.4 3.6 3.5 7.0 7.8

Non-time specific 24.7 24.7 27.9 26.6 25.9 25.2
Forward-looking 0.6 0.3 1.8 3.2 0.5 0.3
Financial 3.4 3.4 3.2 2.8 4.8 4.9
Table VIII. Non-financial 29.9 29.9 30.1 30.5 28.6 28.4
ICVD quality for HC, Quantitative 22.8 24.8 7.3 10.3 24.4 25.0
OC and RC Qualitative 10.5 8.5 26.1 23.0 8.9 8.4
2007). Qualitative information on the other hand enhances the communicative potential Intellectual
of numbers (Mouritsen et al., 2001). capital
Concerning ICVD time orientation, all three categories show a high level of
non-time-specific information, followed by historical information and, in the last information
position, forward-looking information, which has an extremely low frequency level.
Sustainability reports usually communicate the activities of firms during the year
rather than the initiatives they intend to develop in the near future. Firms may consider 551
forward looking information as very sensitive and hence prefer not to reveal future
intellectual capital strategies to competitors.
In terms of historical and non-time-specific information, Henningsson (2009)
demonstrated that this kind provides stakeholders an opportunity to conduct valuable
analyses of the firm’s activities and performance. The low presence of forward-looking
information could instead be considered negative due to its relevance in the
accountability and decision-making process (Hooks et al., 2002; Orens and Lybaert,
2007) and its capacity to inform stakeholders on the firm’s ability to create future value.
The results of the nature of the ICVD dimension also provide some interesting
points for discussion. ICVD is expressed mainly in non-financial terms, while among
all the seven quality sub-dimensions, the non-financial sub-dimension is the most
reported (Table VIII). Non-financial information is considered value relevant in
explaining higher economic performance (Flöstrand and Ström, 2006; Ittner, 2008) and
is not so often reported in corporate disclosure ( Johanson, 2003). As for quantitative
information, the high incidence of the non-financial dimension is related to the aims
and characteristics of sustainability reports (Perrini, 2006). Its high presence may be
seen as a positive signal of the firm’s willingness to provide information that increases
the accuracy of stakeholder analyses (Arvidsson, 2010, 2011).
In terms of trends over time, the findings show an increase in disclosure levels.
However, the results of the two-tailed paired sample t-test (Table IX) demonstrate that
only the historical and quantitative quality sub-dimensions show a statistically
significant increase while none of the intellectual capital categories, and consequently
also ICVD total frequency, show a statistically significant increase. Therefore, contrary
to Sonnier et al. (2008) and other longitudinal studies (Abeysekera and Guthrie, 2005;
Vandemaele et al., 2005), it was not possible to confirm a statistical significant increase
in ICVD over time.

t Significance (two-tailed)

Two-tailed paired sample t-test IC categories and ICVD total frequency

HC 2005 – HC 2006 1.114 0.273
OC 2005 – OC 2006 1.828 0.076
RC 2005 – RC 2006 0.945 0.351
ICVD 2005 – ICVD 2006 1.519 0.138
Two tailed paired sample t-test quality dimensions
Historical 2005 – historical 2006 2.230 0.032
Forward-looking 2005 – forward-looking 2006 1.193 0.241
Non-time specific 2005 – non-time specific 2006 0.979 0.334
Financial 2005 – financial 2006 0.671 0.507
Non-financial 2005 – non-financial 2006 1.475 0.149 Table IX.
Quantitative 2005 – quantitative 2006 2.812 0.008 Two-tailed paired
Non-quantitative 2005 – non-quantitative 2006 0.517 0.609 sample t-test results
JIC The discussion demonstrates that the sustainability reports show an extensive
13,4 and varied amount of ICVD and confirms previous studies that argued that
sustainability reports could be a useful document to provide some information on
intellectual capital. In spite of this, and the growing attention of firms in
communicating corporate social responsibility information, some critical aspects
influence the use and relevance of sustainability reports. Many stakeholders still view
552 this type of report with scepticism and consider it a symbolic and ceremonial tool
(Beattie and Pratt, 2002; Riise Johanson, 2010). For instance, Campbell and Slack (2011)
demonstrate a general lack of interest in sustainability reports by financial market
agents who are unwilling to read them because they consider them immaterial and
irrelevant to their decision-making processes.
Scepticism of sustainability reports is also prevalent among others stakeholders
such as employees and customers. Riise Johanson (2010) demonstrated that employees
prefer to acquire information through institutional arrangements in the workplace
than from sustainability reports because they consider the former more reliable.
McInnes et al. (2007) found that employees browsed sustainability reports but did
not use them to acquire information. Customers and suppliers instead scarcely use
these reports. For these latter stakeholder categories, the annual report provides
decision-relevant information on a time scale that is considered acceptable
(McInnes et al., 2007) and customers are also particularly sceptical about the
significance and reliability of sustainability reports. Galli and Baldon (2005) showed
that Italian customers, although interested in sustainability reports, consider it a
document that is published solely to improve a company’s reputation and contains
information that is too complicated to understand and not completely verifiable.
They suggest that companies should take a more critical approach to writing the
report and should include company weaknesses and correlated suggestions for their
resolution.

6. Conclusions
This study contributes to sustainability report ICVD analyses. The purpose of this
paper was to investigate the content, frequency and quality of ICVD and the changes
over two years (2005 and 2006) in a sample of 37 sustainability reports published
by Italian-listed companies. The results demonstrate an emphasis on human capital
disclosure, the most reported category, followed by relational capital and
organisational capital and an increase in information over time. The ICVD quality
analysis indicates that information is mainly expressed in non-financial, quantitative
and non-time-specific terms and that forward-looking information has the lowest level
of disclosure. Furthermore these results indicate that sustainability reports provide
a set of ICVD information that could be used by stakeholders to acquire useful
information on firm activities and performance. However, sustainability reports
are currently scarcely read by company stakeholders (employees, customers and
financial market agents) since they are not considered reliable documents.
Also in the intellectual capital literature there are similar problems regarding
frameworks and models developed by the academic researchers that are not adopted
by the companies. For instance O’Donnell et al. (2006) argued that the benefits of
managing intangibles have often not been realised in practice. Booker et al. (2008)
conducted 12 semi-structured interviews with IC professionals in order to understand
the relevance of intellectual capital research and suggested eight implications to
increase research relevance and the related findings. Among the eight implications,
they suggest that a possible short-term solution is to provide, in addition to a set of Intellectual
practical recommendations, also concrete implementation steps and an impact capital
measurement approach to facilitate the work of manager.
Kujansivu (2008, 2011) examines the gap between theory and practice in order to information
understand why companies do not apply frameworks and tools that are commonly
known in the intellectual capital literature. Through action research, interviews
and content analysis of financial statements, the author shows that intellectual 553
capital frameworks and models, such as Meritum guidelines and Danish intellectual
capital report guidelines, are applied by companies. In addition, the research
shows that such models are designed case by case and that there are many factors
affecting the choice of how to operationalise intellectual capital management.
With regard of this last point, intellectual capital is considered important and
relevant but often its management and measurement is operationalised not
using intellectual capital frameworks or models, but other management
approaches.
From this brief analysis emerges the importance of intellectual capital management
and measurement for practitioners but at the same time is underlined the lack of a
strict connection and sharing between research and practitioners communities in
order to increase the relevance of academic research and resolve practical problems
inside the companies (Booker et al., 2008). A possible solution may be the development
of field work based on the practice of engaged scholarship (Van de Ven, 2007) that
should allow to define problems, contribute to theory, offer solutions and communicate
results in ways to effectively build a bridge between the worlds of academic
and practice.
To conclude the analysis, some possible ways to increase the relevance of
sustainability reports, that may be applied also to the field of intellectual capital and
of the related frameworks and models, are suggested. First, providing education and
training to some categories of stakeholders may increase their ability to appreciate
the content of sustainability reports and the positive associations between intangibles,
corporate social responsibility activities and financial results. A second possibility
would be to reduce the number of sustainability report guidelines available in the
literature, which often generate a fragmented report based on several guidelines
(at least in the Italian setting). In addition, sustainability reports are often too lengthy
and provide a substantial narrative section, which may be difficult to understand
and may not conform with the expectations of stakeholders who want a clear and
comprehensible document (Galli and Baldon, 2005). On this point, Campbell and Slack
(2011) explain that it is unlikely that sustainability reports will change substantially if
pressure for change is predominantly applied to only one point of the reporting chain.
They asserted that “initiatives such as GRI and NGO/academic pressure aimed
primarily at preparers are unlikely to change” the structure of sustainability reports
and that pressure for change could come from potential users of sustainability reports
who should start requesting more reliable sustainability information.
Finally, as argued by Bhimani and Soonawalla (2005), the development of a more
comprehensive and integrated approach to reporting would be desirable. This
approach should incorporate corporate financial performance, corporate governance,
corporate social responsibility and intellectual capital information into a spectrum
of corporate disclosure responsibilities able to provide a more complete and integrated
overview of firm activities, characteristics and performance. The clarity of information
could be increased with the aim of improving stakeholders decision making, for more
JIC extensive engagement with the stakeholders community and to reduce also
13,4 information asymmetry (Eccles and Krzus, 2010).
The content analysis-related limitations of this study concern the quantification
metric used and the subjective understanding of the issues among researchers. A
further limitation is constituted by the sample size and the time analysis based on two
years, which does not permit generalising the results in the absence of a more extensive
554 statistical analysis.
Finally further research could investigate ICVD in sustainability reports through
international comparisons, also comparing ICVD in different types of documents such
as annual reports, sustainability reports and presentations to financial analysts. In
addition, a more refined method to evaluate the ICVD quality profile should be
undertaken to broaden the analysis. Also qualitative studies could be important in
understanding what financial market agents such as buy-side analysts, sell-side
analysts and fund managers think of the presence and quality characteristics of ICVD
in sustainability reports.

Note
1. For the meaning of intellectual capital items see Appendix “Definition and nature of
information” in Li et al. (2008, pp. 155-9) and Appendix in Guthrie et al. (2007, pp. 103-15)
while for the meaning of IC indicators see Appendix “Definition and nature of information”
in Li et al. (2008).

References
Abeysekera, I. and Guthrie, J. (2005), “An empirical investigation of annual reporting trends
of intellectual capital in Sri Lanka”, Critical Perspectives on Accounting, Vol. 16 No. 3,
pp. 151-63.
April, K.A., Bosma, P. and Deglon, D. (2003), “IC measurement and reporting: establishing
a practice in SA mining”, Journal of Intellectual Capital, Vol. 4 No. 2, pp. 165-80.
Arvidsson, S. (2010), “Communication of corporate social responsibility: a study of the view
of management teams in large companies”, Journal of Business Ethics, Vol. 96 No. 3,
pp. 339-54.
Arvidsson, S. (2011), “Disclosure of non-financial information in the annual report: a
management-team perspective”, Journal of Intellectual Capital, Vol. 12 No. 2, pp. 277-300.
Barnett, M. (2007), “Stakeholder influence capacity and the variability of financial returns
to corporate social responsibility”, Academy of Management Reviews, Vol. 32 No. 3,
pp. 794-816.
Beattie, V. and Pratt, K. (2002), Voluntary Annual Report Disclosure: What Users Want, Institute
of Chartered Accountants of Scotland, Edinburgh.
Beattie, V. and Thomson, S. (2007), “Lifting the lid on the use of content analysis to investigate
intellectual capital disclosures”, Accounting Forum, Vol. 31 No. 2, pp. 129-63.
Beattie, V. and Thomson, S. (2010), Intellectual Capital Reporting: Academic Utopia or Corporate
Reality in a Brave New World? The Institute of Chartered Accountants of Scotland,
Edinburgh.
Beattie, V., McInnes, B. and Fearnley, S. (2004), “A methodology for analysing and evaluating
narratives in annual reports: a comprehensive descriptive profile and metrics for
disclosure quality attributes”, Accounting Forum, Vol. 28 No. 3, pp. 205-36.
Beretta, S. and Bozzolan, S. (2008), “Quality versus quantity: the case of forward-looking
disclosure”, Journal of Accounting, Auditing and Finance, Vol. 23 No. 3, pp. 333-75.
Bhimani, A. and Soonawalla, K. (2005), “From conformance to performance. The corporate Intellectual
responsibilities continuum”, Journal of Accounting and Public Police, Vol. 24 No. 3,
pp. 165-74. capital
Boesso, G. and Kumar, K. (2007), “Drivers of corporate voluntary disclosure: a framework and information
empirical evidences from Italy and the United States”, Accounting, Auditing and
Accountability Journal, Vol. 20 No. 2, pp. 269-96.
Bontis, N. (1998), “Intellectual capital: an exploratory study that develops measures and models”, 555
Management Decision, Vol. 36 No. 2, pp. 63-76.
Booker, L.D., Bontis, N. and Serenko, A. (2008), “The relevance of knowledge management
and intellectual capital research”, Knowledge and Process Management, Vol. 15 No. 4,
pp. 235-46.
Bozzolan, S., Favotto, F. and Ricceri, F. (2003), “Italian annual intellectual capital disclosure: an
empirical analysis”, Journal of Intellectual Capital, Vol. 4 No. 4, pp. 543-58.
Branco, M. and Rodrigues, L. (2006), “Corporate social responsibility and resource-based
perspectives”, Journal of Business Ethics, Vol. 69 No. 2, pp. 111-32.
Brennan, N. (2001), “Reporting intellectual capital in annual reports: evidence from Ireland”,
Accounting, Auditing & Accountability Journal, Vol. 14 No. 4, pp. 423-36.
Brooking, A. (1996), Intellectual Capital: Core Assets for the Third Millenium Enterprises,
International Thomson Business Press, London.
Brown, S. and Hillegeist, S. (2007), “How disclosure quality affects the level of information
asymmetry”, Review of Accounting Studies, Vol. 12 Nos 2-3, pp. 433-77.
Bukh, P.N., Larsen, H.T. and Mouritsen, J. (2001), “Constructing intellectual capital statements”,
Scandinavian Journal of Management, Vol. 17 No. 1, pp. 87-108.
Bukh, P.N., Nielsen, C., Gormsen, P. and Mouritsen, J. (2005), “Disclosure of information on
intellectual capital in Danish IPO prospectuses”, Accounting, Auditing & Accountability
Journal, Vol. 18 No. 6, pp. 713-32.
Campbell, D. and Ridhuan Abdul Rahman, M. (2010), “ ‘A longitudinal examination of intellectual
capital reporting in Marks & Spencer annual reports’, 1978-2008”, British Accounting
Review, Vol. 42 No. 1, pp. 56-70.
Campbell, D. and Slack, R. (2011), “Environmental disclosure and environmental risk:
sceptical attitudes of UK sell-side bank analysts”, British Accounting Review, Vol. 43 No. 1,
pp. 54-64.
Castillo Polo, F. and Gallardo Vázquez, D. (2008), “Social information within intellectual capital
report”, Journal of International Management, Vol. 14 No. 4, pp. 353-63.
Colbert, B.A. (2004), “The complex resource-based view: implications for theory and practice in
strategic human resource management”, Academy of Management Review, Vol. 28 No. 3,
pp. 341-58.
Cordazzo, M. (2005), “IC statement vs. environmental and social reports: an empirical analysis
of their convergences in the Italian context”, Journal of Intellectual Capital, Vol. 6 No. 3,
pp. 441-64.
Cormier, D., Aerts, W., Josée Ledoux, M. and Magnan, M. (2009), “Attributes of social and human
capital disclosure and information asymmetry between managers and investors”,
Canadian Journal of Administrative Sciences, Vol. 27 No. 1, pp. 71-88.
Danish Ministry of Science, Technology and Innovation (DMSTI) (2003), Intellectual Capital
Statements – The New Guidelines, DMSTI, Copenhagen.
Del Bello, A. (2006), “Intangibles and sustainability in local government reports: an
analysis into an uneasy relationship”, Journal of Intellectual Capital, Vol. 7 No. 4,
pp. 440-56.
JIC Dumay, J.C. and Tull, J.A. (2007), “Intellectual capital disclosure and price-sensitive
Australian stock exchange announcements”, Journal of Intellectual Capital, Vol. 8 No. 2,
13,4 pp. 236-55.
Eccles, R.G. and Krzus, M.P. (2010), One Report: Integrated Reporting for a Sustainable Strategy,
John Wiley and Sons, Hoboken, NJ.
Edvinsson, L. and Malone, M.S. (1997), Intellectual Capital: The Proven Way to Establish Your
556 Company’s Real Value by Measuring its Hidden Values, Piatkus, London.
Flöstrand, P. and Ström, N. (2006), “The valuation relevance of non-financial information”,
Management Research News, Vol. 29 No. 9, pp. 580-97.
Galli, L. and Baldon, M.G. (2005), Sbilanciati. I bilanci sociali delle imprese visti dai consumatori,
Associazione Difesa Consumatori e Ambiente, Roma.
Gamerschlag, R. and Moeller, K. (2011), “The positive effects of human capital reporting”,
Corporate Reputation Review, Vol. 14 No. 2, pp. 145-55.
Garcı̀a-Ayuso, M. (2003), “Factors explaining the inefficient valuation of intangibles”,
Accounting, Auditing & Accountability Journal, Vol. 16 No. 1, pp. 57-69.
Garcı̀a-Meca, E. and Martinez, I. (2007), “The use of intellectual capital information in investment
decisions. An empirical study using analyst report”, International Journal of Accounting,
Vol. 42 No. 1, pp. 57-81.
Garcı̀a-Meca, E., Parra, I., Larran, M. and Martı̀nez, I. (2005), “The explanatory factors of
intellectual capital disclosure to financial analysts”, European Accounting Review, Vol. 14
No. 1, pp. 63-94.
Global Reporting Initiative (GRI) (2006), Sustainability Reporting Guidelines, GRI, Boston, MA.
Goh, P.C. and Lim, K.P. (2004), “Disclosing intellectual capital in company annual
reports: evidence from Malaysia”, Journal of Intellectual Capital, Vol. 5 No. 3,
pp. 500-10.
Gray, R.H., Kouchy, R. and Lavers, S. (1995), “Constructing a research database of social and
environmental reporting by UK companies: a methodological note”, Accounting, Auditing
& Accountability Journal, Vol. 8 No. 2, pp. 78-101.
Guthrie, J. and Petty, R. (2000), “Intellectual capital: Australian annual reporting practices”,
Journal of Intellectual Capital, Vol. 1 No. 3, pp. 241-51.
Guthrie, J., Petty, R. and Ricceri, F. (2007), Intellectual Capital Reporting: Lessons from
Honk Kong and Australia, The Institute of Chartered Accountants of Scotland,
Edinburgh.
Guthrie, J., Petty, R., Yongvanich, K. and Ricceri, F. (2004), “Using content analysis as a research
method to inquire into intellectual capital reporting”, Journal of Intellectual Capital, Vol. 5
No. 2, pp. 282-93.
Henningsson, J. (2009), “Fund managers as cultured observers”, Qualitative Research in Financial
Markets, Vol. 1 No. 1, pp. 27-45.
Hillman, A. and Keim, G.D. (2001), “Shareholder value, stakeholder management, and
social issues: what’s the bottom line?”, Strategic Management Journal, Vol. 22 No. 2,
pp. 125-39.
Holland, J. (2004), Corporate Intangibles, Value Relevance and Disclosure Content, Institute of
Chartered Accountants of Scotland, Edinburgh.
Hooks, J., Coy, D. and Howard, D. (2002), “The information gap in annual reports”, Accounting,
Auditing & Accountability Journal, Vol. 15 No. 4, pp. 501-22.
Ittner, C.D. (2008), “Does measuring intangibles for management purposes improve performance?
A review of the evidence”, Accounting and Business Research, Special Issue, Vol. 38 No. 3,
pp. 261-72.
Johanson, U. (2003), “Why are capital market actors ambivalent to information about certain Intellectual
indicators on intellectual capital?”, Accounting, Auditing & Accountability Journal, Vol. 16
No. 1, pp. 31-8. capital
Jose, A. and Lee, S.M. (2007), “Environmental reporting of global corporations: a content analysis information
based on website disclosures”, Journal of Business Ethics, Vol. 72 No. 4, pp. 307-21.
Krippendorff, K. (2004), Content Analysis: An Introduction to Its Methodology, 2nd ed., Sage
Publications, Thousand Oaks, CA. 557
Kujansivu, P. (2008), “Intellectual capital management. Understanding why Finnish companies
do not apply intellectual capital management models”, PhD dissertation thesis, Tampere
University of Technology, Tampere.
Kujansivu, P. (2011), “IC management: explaining the gap between theory and practice”, in
Schiuma, G. (Ed.), Managing Knowledge Assets and Business Value Creation in
Organizations: Measures and Dynamics, Igi-Global Books, Hershey, PA, pp. 205-21.
Lev, B. (2001), Intangibles: Intangibles: Management, Measurement, and Reporting, Brookings
Institution Press, Washington, DC.
Lev, B. and Zambon, S. (2003), “Intangibles and intellectual capital: an introduction to a special
issue”, European Accounting Review, Vol. 12 No. 4, pp. 597-603.
Li, J., Pike, R. and Haniffa, R. (2008), “Intellectual capital disclosure and corporate
governance structure in UK firms”, Accounting and Business Research, Vol. 38 No. 2,
pp. 137-59.
Lim, L., Chan, C. and Dallimore, P. (2010), “Perceptions of human capital measures: from
corporate executives and investors”, Journal of Business and Psychology, Vol. 25 No. 4,
pp. 673-88.
McInnes, B., Beattie, V. and Pierpoint, J. (2007), Communications Between Management and
Stakeholders: A Case Study, The Institute of Chartered Accountants in England and Wales,
London.
McWilliams, A., Siegal, D.S. and Wright, P.M. (2006), “Corporate social responsibility: strategic
implications”, Journal of Management Studies, Vol. 43 No. 1, pp. 1-18.
Mangena, M., Pike, R. and Li, J. (2010), Intellectual Capital Disclosure Practices and Effects on the
Cost of Equity Capital: UK Evidence, The Institute of Chartered Accountants of Scotland,
Edinburgh.
Meritum (2002), Proyeto Meritum: Guidelines for Managing and Reporting Intangibles, Meritum,
Madrid.
Milne, M. and Adler, R.W. (1999), “Exploring the reliability of social and environmental
disclosures content analysis”, Accounting, Auditing & Accountability Journal, Vol. 12 No. 2,
pp. 237-56.
Mouritsen, J., Larsen, H.T. and Bukh, P.N.D. (2001), “Intellectual capital and the ‘capable firm’:
narrating, visualising and numbering for managing knowledge”, Accounting,
Organisation and Society, Vol. 26 Nos 7-8, pp. 735-62.
Nahapiet, J. and Ghoshal, S. (1998), “Social capital, intellectual capital and the organizational
advantage”, Academy of Management Review, Vol. 23 No. 2, pp. 242-66.
O’Donnell, D., Bo Henriksen., L. and Voelpel, S.C. (2006), “Guest editorial: becoming critical on
intellectual capital”, Journal of Intellectual Capital, Vol. 7 No. 1, pp. 5-11.
Oliveira, L., Rodrigues, L. and Russell, C. (2006), “Firm-specific determinants of intangibles
reporting: evidence from the Portuguese stock market”, Journal of Human Resource
Costing and Accounting, Vol. 10 No. 1, pp. 11-33.
Oliveira, L., Rodrigues, L. and Russell, C. (2010), “Intellectual capital reporting in sustainability
reports”, Journal of Intellectual Capital, Vol. 11 No. 4, pp. 575-94.
JIC Orens, R. and Lybaert, N. (2007), “Does the financial analysts’ usage of non financial information
influence the analysts’ forecast accuracy? Some evidence from the Belgian sell-side
13,4 financial analyst”, International Journal of Accounting, Vol. 42 No. 3, pp. 237-71.
Parker, L.D. (2007), “Financial and external reporting research: the broadening corporate
governance challenge”, Accounting and Business Research, Vol. 37 No. 1, pp. 39-54.
Pedrini, M. (2007), “Human capital convergences in intellectual capital and sustainability
558 reports”, Journal of Intellectual Capital, Vol. 8 No. 2, pp. 346-66.
Perrini, F. (2006), “The practitioner’s perspective on non-financial reporting”, California
Management Review, Vol. 48 No. 2, pp. 73-103.
Perrini, F., Russo, A. and Tencati, A. (2007), “CSR strategies of SMEs and large firms. Evidence
from Italy”, Journal of Business Ethics, Vol. 74 No. 3, pp. 285-300.
Petty, R., Ricceri, F. and Guthrie, J. (2008), “Intellectual capital: a user’s perspective”, Management
Research News, Vol. 31 No. 6, pp. 434-77.
Ricceri, F. (2008), Intellectual Capital and Knowledge Management, Routledge, London.
Riise Johanson, T. (2010), “Employees, non financial reports and institutional arrangements:
a study of accounts in the workplace”, European Accounting Review, Vol. 19 No. 1,
pp. 97-130.
Roslender, R., Stevenson, J. and Kahn, H. (2006), “Employee wellness as intellectual capital:
an accounting perspective”, Journal of Human Resource Costing and Accounting, Vol. 10
No. 1, pp. 48-64.
Roos, J., Roos, G., Dragonetti, N.C. and Edvinsson, L. (1997), Intellectual Capital: Navigating the
New Business Landscape, Macmillan Publications, Basingstoke.
Sakakibara, S., Hansson, B., Yosano, T. and Kozumi, H. (2010), “Analysts’ perceptions of
intellectual capital information”, Australian Accounting Review, Vol. 20 No. 3, pp. 274-85.
Schiuma, G., Lerro, A. and Sanitate, D. (2008), “Intellectual capital dimensions of Ducati’s
turnaround – exploring knowledge assets grounding a change management program”,
International Journal of Innovation Management, Vol. 12 No. 2, pp. 161-93.
Sing, I. and Van der Zahn, J.L.W.M. (2008), “Determinants of intellectual capital disclosure in
prospectuses of initial public offerings”, Accounting and Business Research, Vol. 38 No. 5,
pp. 409-31.
Sonnier, B.M., Carson, K.D. and Carson, P.P. (2008), “Intellectual capital disclosure by traditional
US companies: a longitudinal assessment”, Journal of Accounting & Organisational
Change, Vol. 4 No. 1, pp. 67-80.
Steenkamp, N. (2007), “Intellectual capital reporting in New Zealand: refining content analysis
as a research method”, PhD dissertation thesis, Auckland University of Technology,
Auckland.
Stewart, T.A. (1997), Intellectual Capital. The New Wealth of Organizations, Doubleady,
New York, NY.
Stiles, P. and Kulvisaechana, S. (2003), Accounting for People Taskforce Report: Human Capital
and Organisational Performance, Department of Trade and Industry, UK Government,
London.
Striukova, L., Unerman, J. and Guthrie, J. (2008), “Corporate reporting of intellectual capital:
evidence from UK companies”, British Accounting Review, Vol. 40 No. 4, pp. 297-313.
Sujan, A. and Abeysekera, I. (2007), “Intellectual capital reporting practices of the top Australian
firms”, Australian Accounting Review, Vol. 17 No. 2, pp. 71-83.
Surroca, J., Tribò, J.A. and Waddock, S. (2010), “Corporate responsibility and financial
performance: the role of intangibles”, Strategic Management Journal, Vol. 31 No. 5,
pp. 463-90.
Sveiby, K.E. (1997), The New Organisational Wealth: Managing and Measuring Knowledge Based Intellectual
Assets, Berrett-Koehler Publisher, San Francisco, CA.
capital
Unerman, J. (2000), “Methodological issues – reflections on quantification in corporate social
reporting content analysis”, Accounting, Auditing and Accountability Journal, Vol. 13 No. 5, information
pp. 667-81.
Vandemaele, S.N., Vergauwen, P.G. and Smits, A.J. (2005), “Intellectual capital disclosure in
The Netherlands, Sweden and the UK: a longitudinal and comparative study”, Journal 559
of Intellectual Capital, Vol. 6 No. 3, pp. 417-26.
Van de Ven, A.H. (2007), Engaged Scholarship: A Guide for Organizational and Social Research,
Oxford University Press, Oxford.
Vergauwen, P.G. and van Alem, F.J. (2005), “Annual report IC disclosures in The Netherlands,
France and Germany”, Journal of Intellectual Capital, Vol. 6 No. 1, pp. 89-104.
Weber, R. (1985), Basic Content Analysis, Quantitative Applications in the Social Sciences, Sage
Publications, Beverly Hills, CA.
Williams, C.C. (2008), “Toward a taxonomy of corporate reporting strategies”, Journal of Business
Communication, Vol. 45 No. 3, pp. 232-64.
Wyatt, A. (2005), “Accounting recognition of intangible assets: theory and evidence on economic
determinants”, The Accounting Review, Vol. 80 No. 3, pp. 967-1002.
Wyatt, A. and Frick, H. (2010), “Accounting for investment in human capital: a review”,
Australian Accounting Review, Vol. 20 No. 3, pp. 199-220.
Youndt, M.A., Subramaniam, M. and Snell, S.A. (2004), “Intellectual capital profiles: an
examination of investments and returns”, Journal of Management Studies, Vol. 41 No. 2,
pp. 335-61.

Further reading
Campbell, D. and Slack, R. (2008), Narrative Reporting: Analysts’ Perceptions of its Value and
Relevance, The Association of Chartered Certified Accountants, London.
Unerman, J., Guthrie, J. and Striukova, L. (2007), UK Reporting of Intellectual Capital, Institute
of Chartered Accountants in England and Wales, London.

Appendix. Content analysis rules

. Frequency (i.e. the number of items occurring in a given category or sub-category)
indicates count sum of each specific intellectual capital item or intellectual capital
indicator appear in sustainability report (i.e. frequency not indicates sum of the number of
times that each specific item or indicator appear. For instance customer satisfaction index
for year XX is one frequency. If this intellectual capital indicator appears two times in the
same report it is counted just one time.
. Do not recount each occurrence of an intellectual capital information (i.e. ignoring multiple
occurrences of a give IC items or IC indicators).
. Code for sentence (do not code for word and theme).
. Code for graph, table and indicator.
. Do not code for photograph.
. Do not code if concept is implied.
. If a disclosure is too vague in its reference to intellectual capital, then it shall not be
recorded as a ICVD.
JIC . If a concept can be insert into two different items or indicators apply the dominance
principle (i.e. insert the concept in the area which seems to be more closely linked).
13,4
. One sentence is coded and counted as one frequency.
. Inside a table one year is coded and counted as one frequency.
. One graph is coded and counted as one frequency.
560 . One indicator outside a table is coded and counted as one frequency.
. Do not analyse corporate governance, environmental, relations with community and
relations with public administration sections.
. Do not care about the guidelines used by the companies to development the report (GRI,
AA1000, Italian guideline for social report, etc.) because more guidelines are used at the
same time by the majority of the companies.
. Quantitative information: facts and claims that are represented by numbers.
. Qualitative information: facts and claims presented in narrative (not numerical) form.
. Historical information: facts and claims referred to the previous year compared with the
year of the report analysed.
. Non-time specific information: facts and claims referred of the year of report analysed.
. Forward-looking information: facts and claims referred of next year compared with the
year of the report analysed.
. Financial information: facts and claims that are represented by monetary numbers.
. Non-financial information: facts and claims presented in not monetary number/form (e.g.
time, quality, per cent, quantity).

About the authors

Lino Cinquini, PhD, is Professor of Management Accounting at the Institute of Management of
Sant’Anna School of Advanced Studies, Pisa. His research interests are in cost management,
strategic management accounting, performance measurement and accounting history. He has
conducted research in these areas in both the manufacturing and service sector, including health
care and published in Accounting, Business & Financial History, Journal of Accounting and
Organizational Change, Accounting Historians Journal, Business Process Management Journal.
He is Co-Editor of the Journal of Management and Governance, reviewer of Accounting, Business
& Financial History and member of the research board of Chartered Institute of Management
Accountants (CIMA). Lino Cinquini is the corresponding author and can be contacted at:
l.cinquini@sssup.it
Emilio Passetti, PhD in Business Administration, is a Research Fellow at the Institute of
Management of Sant’Anna School of Advanced Studies, Pisa. His research interests are
intellectual capital disclosure and sustainability accounting. He has presented research papers at
national and international conferences and published some articles in Italian journals.
Andrea Tenucci, PhD in Business Administration, is an Assistant Professor at the Institute of
Management of Sant’Anna School of Advanced Studies, Pisa. His research interests are cost
management, strategic management accounting and service science. He has published in Italian
and international journals such as Accounting Historians Journal and Journal of Accounting and
Organizational Change. He has also presented several research papers at national and
international conferences.
 Marco Frey is Professor of Management at the Institute of Management of the Sant’Anna Intellectual
School of Advanced Studies, Pisa. His research interests are in the environmental, corporate
social responsibility, renewable energy, waste and health and safety management. He is the
capital
Director of the Institute of Management of Sant’Anna School of Advanced Studies. He has been information
actively involved in a variety of research projects for the European Commission and Italian
Ministry for Environment and for several other public and private organisations. He has
presented at international and national conferences and published in Italian journals and 561
international journals such as Greener Management International, Journal of Cleaner Production,
Environmental Management Journal, Energy Conservation and Management, Environmental
Policy and Governance, Journal of Environmental Planning and Management.

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com

Or visit our web site for further details: www.emeraldinsight.com/reprints