Drivers of Innovation Capital Disclosure in Intellectual Capital Statements : Evidence from Europe

Innovations are one of the major determinants of competitive success. As a result, there is a demand for information on the innovation efforts of firms among investors, other stakeholders, and the relevant public. Using content analysis, this paper examines the innovation capital disclosure (INCD) characteristics, i.e., disclosure quantity and quality, in intellectual capital statements (ICS) of 51 European for-profit firms. Additionally, the relationship between INCD characteristics and industry, firm size, region of domicile, and disclosure guidelines adopted are analysed. Our content analysis detects an average of 29.16 items on innovation capital (INC) per ICS. These are mainly qualitative, non-financial, and historical-oriented. Furthermore, as expected, industry, firm size, region, and disclosure guideline drive the quantity of disclosure. Prior empirical studies on voluntary disclosure also suggested a relation-ship between firm size and disclosure quality. Interestingly, our results for INCD in ICS do not support this relationship. This provides tentative evidence of the good applicability of ICS for firms of any size. Furthermore, our findings show mostly homogeneous disclosure pat-terns across regions in Europe and between disclosure guidelines adopted, suggesting that the multi-national efforts toward fostering INCD made the ICS phenomenon more a European than a local phenomenon