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Exploring the Effects of Corporate Governance on Intellectual Capital Disclosure: An Analysis of European Biotechnology Companies

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  • Fabrizio Cerbioni
  • Antonio Parbonetti

Abstract

This paper examines the relationship between governance variables and voluntary intellectual capital disclosure in a sample of European biotechnology firms. We extend previous research by simultaneously considering governance mechanisms such as the proportion of independent directors, board dimension, CEO duality and board structure in relationship to voluntary disclosure on intellectual capital. We understand voluntary disclosure as a multidimensional and complex concept and, hence, use the semantic properties of the information disclosed, and on the content of information, as proxies for the quality of disclosure. Our results suggest that governance-related variables strongly influence the quantity of information disclosed, thus confirming our hypotheses. In regard to the quality of disclosure, our results show that (1) the proportion of independent directors is positively related to the disclosure of internal structure, (2) CEO duality is negatively linked to the disclosure of forward-looking information, and (3) board structure helps to improve the annual report's overall readability. We contribute to agency theory by indicating that corporate governance mechanisms and voluntary disclosure can be used strategically to reduce agency conflicts. The results of this study might be of interest to regulators, investment analysts and market participants.

Suggested Citation

  • Fabrizio Cerbioni & Antonio Parbonetti, 2007. "Exploring the Effects of Corporate Governance on Intellectual Capital Disclosure: An Analysis of European Biotechnology Companies," European Accounting Review, Taylor & Francis Journals, vol. 16(4), pages 791-826.
  • Handle: RePEc:taf:euract:v:16:y:2007:i:4:p:791-826 DOI: 10.1080/09638180701707011
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    References listed on IDEAS

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    1. Ackert, Lucy F. & Tian, Yisong S., 2001. "Efficiency in index options markets and trading in stock baskets," Journal of Banking & Finance, Elsevier, vol. 25(9), pages 1607-1634, September.
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    3. Tian, Yisong S., 2004. "Too much of a good incentive? The case of executive stock options," Journal of Banking & Finance, Elsevier, vol. 28(6), pages 1225-1245, June.
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    Citations

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    Cited by:

    1. Mehmet Ugur (ed.), 2013. "Governance, Regulation and Innovation," Books, Edward Elgar Publishing, number 15264, September.
    2. Mollah, Sabur & Zaman, Mahbub, 2015. "Shari’ah supervision, corporate governance and performance: Conventional vs. Islamic banks," Journal of Banking & Finance, Elsevier, vol. 58(C), pages 418-435.
    3. Michelle Rodrigue & Michel Magnan & Charles Cho, 2013. "Is Environmental Governance Substantive or Symbolic? An Empirical Investigation," Journal of Business Ethics, Springer, pages 107-129.
    4. repec:kap:jbuset:v:142:y:2017:i:2:d:10.1007_s10551-015-2759-1 is not listed on IDEAS
    5. Mao-Chang Wang, 2013. "Value relevance on intellectual capital valuation methods: the role of corporate governance," Quality & Quantity: International Journal of Methodology, Springer, pages 1213-1223.
    6. Marco Allegrini & Giulio Greco, 2013. "Corporate boards, audit committees and voluntary disclosure: evidence from Italian Listed Companies," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 17(1), pages 187-216, February.
    7. Gaia Melloni & Riccardo Stacchezzini & Alessandro Lai, 2016. "The tone of business model disclosure: an impression management analysis of the integrated reports," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 20(2), pages 295-320, June.
    8. Miihkinen, Antti, 2012. "What Drives Quality of Firm Risk Disclosure?," The International Journal of Accounting, Elsevier, vol. 47(4), pages 437-468.
    9. Kanapathippillai, Sutharson & Johl, Shireenjit K. & Wines, Graeme, 2016. "Remuneration committee effectiveness and narrative remuneration disclosure," Pacific-Basin Finance Journal, Elsevier, pages 384-402.
    10. Hamid Mohsin Jadah & Logasvathi A/P Murugiah & Azira Binti Abdul Adzis, 2016. "The Effect of Board Characteristics on Iraqi Banks Performance," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 6(4), pages 205-214, October.
    11. Giovanna Michelon & Antonio Parbonetti, 2012. "The effect of corporate governance on sustainability disclosure," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 16(3), pages 477-509, August.
    12. Nicoleta Maria Ienciu, 2012. "Theoretical Fundamentals of Human Factor," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 15(45), pages 247-264, September.
    13. Rihab Guidara & Younes Boujelbene, 2014. "R&D-Based Earnings Management and Accounting Performance Motivation," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 4(2), pages 81-93, April.
    14. repec:hur:ijaraf:v:4:y:2014:i:2:p:85-97 is not listed on IDEAS
    15. Giulio Greco, 2011. "Determinants of board and audit committee meeting frequency: Evidence from Italian companies," Managerial Auditing Journal, Emerald Group Publishing, vol. 26(3), pages 208-229, March.
    16. Passetti, Emilio & Tenucci, Andrea & Cinquini, Lino & Frey, Marco, 2009. "Intellectual capital communication: evidence from social and sustainability reporting," MPRA Paper 16589, University Library of Munich, Germany.
    17. G. Scott Erickson, 2013. "Role of governance in national innovation systems: from intellectual property to intellectual capital," Chapters,in: Governance, Regulation and Innovation, chapter 10, pages 239-261 Edward Elgar Publishing.

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