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Evaluating disclosure theory using the views of UK finance directors in the intellectual capital context

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  • Vivien Beattie
  • Sarah Jane Smith

Abstract

In contrast to most prior research in this area, which focuses on actual disclosures, this study uses a large-scale direct method to investigate the factors that a key preparer group believes influence intellectual capital (IC) disclosure decisions. IC disclosures are typically characterised by uncertainty of interpretation and high levels of commercial sensitivity. A questionnaire elicits 93 UK-listed company finance directors' views regarding the influences on these decisions. Results are used to evaluate the relative explanatory power of several theoretical and practical reasons for disclosure. Strongest support is found for competitive disadvantage and capital market considerations. Issues related to legitimacy theory, stakeholder theory and other economic disclosure costs also feature. Factor analysis reduces the set of 28 incentives and disincentives to 10 uncorrelated dimensions, indicating that a broad and complex set of overlapping factors affect the disclosure decision. The importance of disclosure incentives and disincentives is found to vary both within and between disclosure topics, which may explain the variation in findings in prior research.

Suggested Citation

  • Vivien Beattie & Sarah Jane Smith, 2012. "Evaluating disclosure theory using the views of UK finance directors in the intellectual capital context," Accounting and Business Research, Taylor & Francis Journals, vol. 42(5), pages 471-494, December.
    • Handle: RePEc:taf:acctbr:v:42:y:2012:i:5:p:471-494
    DOI: 10.1080/00014788.2012.668468
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    References listed on IDEAS

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    1. Herbert A. Simon, 1984. "Models of Bounded Rationality, Volume 1: Economic Analysis and Public Policy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262690861, December.
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    Cited by:

    1. Abdo, Hafez & Mangena, Musa & Needham, Graham & Hunt, David, 2018. "Disclosure of provisions for decommissioning costs in annual reports of oil and gas companies: A content analysis and stakeholder views," Accounting forum, Elsevier, vol. 42(4), pages 341-358.
    2. Luciano Marchi & Sara Trucco, 2017. "La comunicazione al mercato delle performance economico-finanziarie: il ruolo del controllo di gestione," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2017(3), pages 55-78.
    3. Vasiliki Athanasakou & Khaled Hussainey, 2014. "The perceived credibility of forward-looking performance disclosures," Accounting and Business Research, Taylor & Francis Journals, vol. 44(3), pages 227-259, June.
    4. YAN, Beibei & AERTS, Walter, 2014. "Rhetorical impression management in corporate narratives and institutional environment," Working Papers 2014014, University of Antwerp, Faculty of Business and Economics.
    5. Melis, Andrea & Gaia, Silvia & Carta, Silvia, 2015. "Directors' remuneration: A comparison of Italian and UK non-financial listed firms' disclosure," The British Accounting Review, Elsevier, vol. 47(1), pages 66-84.
    6. Vivien Beattie & Robin Roslender & Sarah Jane Smith, 2013. "Balancing on a Tightrope: Customer Relational Capital, Value Creation and Disclosure," FINANCIAL REPORTING, FrancoAngeli Editore, vol. 2013(3-4), pages 19-52.
    7. Matthews, Lane & Heyden, Mariano L.M. & Zhou, Dan, 2022. "Paradoxical transparency? Capital market responses to exploration and exploitation disclosure," Research Policy, Elsevier, vol. 51(1).
    8. Pamela Kent & Tamara Zunker, 2017. "A stakeholder analysis of employee disclosures in annual reports," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 57(2), pages 533-563, June.
    9. Lyton Chithambo & Venancio Tauringana & Ishmael Tingbani & Laura Achiro, 2022. "Stakeholder pressure and greenhouses gas voluntary disclosures," Business Strategy and the Environment, Wiley Blackwell, vol. 31(1), pages 159-172, January.
    10. Beattie, Vivien, 2014. "Accounting narratives and the narrative turn in accounting research: Issues, theory, methodology, methods and a research framework," The British Accounting Review, Elsevier, vol. 46(2), pages 111-134.
    11. Chiara Demartini & Sara Trucco, 2016. "Does Intellectual Capital Disclosure Matter for Audit Risk? Evidence from the UK and Italy," Sustainability, MDPI, vol. 8(9), pages 1-19, August.
    12. Ali Ahmadi & Abdelfettah Bouri, 2019. "The Effect of Audit Quality on the Extent of Voluntary Disclosure: Companies Listed in the Tunisian Stock Exchange," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 10(1), pages 59-73, March.

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