The evolution of intellectual capital disclosure driven by European regulatory change. Evidence from the Italian stock market

Purpose - The matter of interest is the reporting and disclosure of intellectual capital (IC) in the global "knowledge economy" era. The aim of the paper is twofold: to verify the level of disclosure of IC through the non-financial statements (NFSs) published by public companies and to identify the main firm-specific factors that explain the propensity to disclose.Design/methodology/approach - Based on the 27 components of IC, a scoring system is designed to measure the level of disclosure of IC by 47 listed Italian companies. Content analysis (CA) is performed on the NFSs these companies published in 2020, to measure each company's so-called intellectual capital disclosure index (ICDI). A regression analysis is then applied to relate the ICDI scores to some firm-specific variables to determine their relevance and influence on the level of disclosure.Findings - Although the NFS was not designed specifically for IC, the results of the analyses show an overall barely satisfactory ability of the NFS to give certain information on IC. Furthermore, the propensity to disclose IC appears significantly related to some firm characteristics considered here, such as capitalization, profitability, productivity, intangibility and financial structure.Research limitations/implications - The analysis relates to a representative but limited sample that does not allow for sectoral or time-series analyses. Extending the companies and years under observation would allow the results to be validated with broader and more in-depth analysis.Originality/value - This paper provides exploratory but interesting evidence about the relationships between IC disclosure (ICD), firm characteristics and market capitalization. Despite several previous studies on the disclosure of IC, no analyses were found that focused on the information capacity of the NFS. Also, to the authors' knowledge, relatively few researchers have considered a set of financial ratios that include capital structure indices.