Intellectual capital disclosure in the integrated reports: the effect on firm value

Due to the transition from a manufacturing-based to a knowledge-based economy, the relevance of intellectual capital (IC) in firm value creation processes has significantly increased. Considering that traditional financial disclosures do not contain IC-related information, various stakeholders have long asked companies to voluntarily disclose their intellectual resources for those to be incorporated into firm performance considerations and va- luations. The advent of integrated reporting provides managers with an innovative tool to address IC disclosure. Nevertheless, despite research already focused on IC information in integrated reporting, knowledge regarding the benefits that companies enjoy through divulging IC-related information in integrated reports remains lim- ited. To fill this gap, this study empirically analyses the impact of IC disclosure quality on firm value in the context of integrated reporting. Based on a sample of 110 companies, findings suggest a significantly positive relationship between all three components of IC (structural, human, social and relationship) and firm value, generating multiple implications for reporting entities, investors, regulators, and managers.