Proceedings

incentives for managers to include intellectual capital disclosures into the annual
reports, in order to acknowledge and demonstrate the effectiveness of intangibles
management (Brennan & Connell, 2000). This type of information is required by
investors with the clear aim to narrow the information gap (Wong & Gardner, 2005).
Consequently, the management, measurement, and disclosure of intellectual capital
have gained relevance as a major research topic (Petty and Guthrie, 1999).
The present paper investigates the reporting practices of companies included in the
STOXX Europe TMI Software & Computer Services index. We believe it to be the
first study in this field targeting the intellectual capital disclosures of firms in the IT
sector, therefore significantly contributing to the intellectual capital disclosure
literature. The results are useful for all those interested in the extent of voluntary
disclosures of intellectual capital, while professional bodies and regulators may also
benefit from the application of relevant methodologies in the creation of guidelines
and accounting policies for those components of intellectual capital which are not yet
formally recognized as assets in the corporate financial statements.
The present study is also testing and thoroughly discussing the methodology of
Guthrie et al. (1999), whose intellectual capital framework involves 24 variables
across three intellectual capital categories. This contribution to the literature is timely
and relevant, since we propose that the aforementioned methodology should be
incorporated into the mainstream corporate disclosure framework, by shaping it to
meet the needs of all stakeholders.
The remainder of the paper is structured as follows. First, several definitions of
intellectual capital and some of its components are provided. In the following, the
paper describes the research method and presents the results. In the final section, the
conclusions are accompanied by a description of tentative avenues of research.
1. THE DEFINITION OF INTELLECTUAL CAPITAL
The global expansion of intangible investments is a major incentive for academic
research. Thinkers from a multitude of fields have attempted to discover the criteria
for the recognition and measurement of this type of corporate investments, which are
by no means similar to acquiring property, plant and equipment. However, the main
obstacle is establishing the perimeter of analysis, since there is no universally
acceptable definition of “intangible investment”. The heterogeneity and the vastness
of the conceptual implications arise also from the usual confusion between such terms
as “intangible”, “dematerialized” or “intellectual” (Feleagă et al., 2010). Moreover,
the term “investment” itself is subject to controversy. For these reasons, we prefer to
use the notion of “intellectual capital”.
The concept of “intellectual capital” has been introduced in the context of academic
research conducted at the beginning of the 1990s on North American and
Scandinavian companies (Dow Chemical, Canadian Imperial Bank of Commerce, and
Skandia, respectively). The results of these investigations are to be found in two
fundamental contributions of Edvinsson & Malone (1997) and Stewart (1997). Thus,
the former consider intellectual capital to be equivalent to having corporate control
over knowledge, management techniques, market relationships and professional skills,
the synergy of which would offer a competitive advantage to the respective firm.
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