Corporate reporting of intellectual capital: Evidence from Ace Market of Bursa Malaysia

The purpose of this study is to investigate the intellectual capital reporting practice of companies listed under Ace Market of Bursa Malaysia. This study also evaluates the relationship of firms' characteristics such as firm size, type of industry, type of auditor and profitability with intellectual capital disclosure (ICD) levels. The extent of ICD was measured by using content analysis method. The data was collected by reviewing the annual reports of 104 companies for the year 2009. The results show that among the three categories, the information under external capital category has the highest reporting record, followed by internal capital and finally the human capital category. The multiple regression analysis was conducted to investigate the relationship between firms' characteristics and ICD. The regression produces an adjusted R2 of 0.377 which indicate that the model is able to explain 37.7 percent of the variance in the dependent variable for the whole sample. The results show that type of industry and type of auditor has a significant association with the intellectual capital disclosure at 5% significant level. Finally, the other variables such as size and profitability did not have any significant association with the ICD. The results have significant implications for setting standard on the disclosure of intellectual capital information in the annual reports. It will give some insight to the policymakers towards the needs to design future accounting guidelines on ICD.