A Theoretical Framework for Intellectual Capital Disclosure

Intangible have come to play an important role in the process of value creation especially in knowledge intensive firms. Intellectual capital (IC) and corporate financial performance also is seen to be associated. The nature and amount of IC disclosure is found to be low in many emerging economies including India. The reason is normally attributed to no regulatory compulsion to measure & disclose IC and also general lack of awareness among the firms about the tools to measure and report IC, the financial returns associated with it and skills required to manage and create knowledge within the firm. This article attempts to provide an overview of the concept of IC, the need for IC disclosure, and the various methods that the firm can adopt to disclose intellectual capital to its external stakeholders and also come up with strong suggestion for knowledge intensive firms in India to start the process of IC disclosure.