Intellectual Capital Disclosure in the Integrated Reporting: An Impression Management Analysis

Purpose—Intellectual capital (IC) is fundamental to understanding how firms create value; however, current IC disclosure (ICD) is inadequate. The International Integrated Reporting Council (IIRC) aims to foster ICD by means of integrated reporting (IR); such a report should display how IC and other forms of capital (e.g. financial) contribute to value creation over time. Drawing on impression management (IM) studies, this article seeks to assess the quality of ICD offered in IR. Design/methodology/approach—Using manual content analysis of the 54 reports available in the IIRC website, this study considers both the content of ICD (type of capital) and specific attributes (evidence, time orientation and tone). In addition, the study tests the relationship between the ICD tone and specific corporate characteristics (size, performance and membership in particular industry groups) to determine whether firms use ICD to manage public perceptions of corporate behaviour. Findings—The majority of ICD is focussed on relational capital, with limited quantitative and forward-looking information, as previous ICD studies indicate. Furthermore, the tone of ICD is significantly associated with firm size and membership in industries with a high level of intangibles, in support of the use of ICD as an IM strategy. Originality/value—This research contributes to the literature by offering evidence of the poor quality of current IC reporting in the IR and thus strongly questions whether IR can improve ICD.