Analysis of intellectual capital disclosure – an illustrative example

The purpose of this paper is to provide an analysis of intellectual capital (IC) disclosures in annual reports (mandatory and voluntary) and draw attention to the specific issues related to the methodology used i.e. content analysis. The focus is to incorporate all forms of IC disclosure – narratives, numbers, and visual images – into the analysis as well as highlight the need to study both quantity (extent) and quality of disclosure.

Using content analysis, this paper analyzes 30 of Malaysia's largest public‐listed companies from the IC disclosure of 2008 annual reports. The results are used to discuss specific methodological issues such as the usage of an IC index, choice of unit of analysis, quantity versus quality, presence/absence versus multiple disclosures, and the usage of narratives, numbers, and visual images.

This paper proposes that themes are the most appropriate recording and counting unit to analyze IC information combining narratives, numbers, and visual images. The discussion finds, among others, that while quantity and quality are highly related, quality of disclosure provides the most insights into the disclosure behavior adopted by companies.

This paper provides methodological guidelines to future IC researchers interested in analyzing the quantity and quality of IC disclosure.

To the best of the authors' knowledge, so far there are no studies published that provide a detailed discussion on ways to capture the quantity and quality of IC information disclosed in annual reports using all three forms of disclosure – narratives, numbers, and visual images.