Intellectual Capital Reporting from Social and Sustainability Reports

Purpose - The purpose of this paper is to analyze the level and the quality of voluntary disclosures of intellectual capital (IC) in the sustainability reports on a sample of Italian listed companies. The paper aims to highlight the level and determinants of IC disclosures in sustainability reports. Design/methodology/approach - We conducted analysis on twelve sustainability reports for two years (2009-2010). These are related to six firms selected among the most capitalized Italian listed companies. To investigate the "level of disclosure" we identified the presence of IC information, while to evaluate the "IC quality" we constructed a voluntary disclosure index based on content analysis. Findings - IC information disclosure is more likely present in sustainability reports of firms with a higher level of application of the Global Reporting Initiative framework. Research limitations/implications - Subjective judgment is involved in items selection and then in constructing the disclosure index. Other limitation is related to the methodology of content analysis. Practical implications - The results confirm that the sustainability report can adequately represent the intellectual capital, especially in order to understand its role in the firm and the interaction with other variables present in the firm. Originality/value - The paper supports that a correct management of corporate responsibility practices is an opportunity to develop IC such as a source of value creation. In detail the study highlights the level and determinants of IC disclosure in sustainability reports and highlights the legitimacy and reputation are potential incentives to engage it practice.