Does Equity Market Differently Perceive IC Management and Disclosure Behaviours?

This study aims to investigate whether, and to what extent, investors’ community differently perceives corporate intellectual capital (IC) management behaviours compared with non-financial IC disclosure policies. The hypotheses are tested by employing the multivariate regression analysis and the R2 decomposition technique. The analysis is carried out on Italian-listed companies over the period 2008–2011. The results suggest that a good management utilization of intellectual resources strongly contributes to explain the market assessments of firm value creation of high-tech companies. These companies when characterized by a higher intellectual capital management efficiency are recognized and rewarded by the investor community over time, independently from the dissemination of non-financial IC disclosure. Furthermore, it emerges that non-financial IC disclosure tends to lose its usefulness over periods of higher business and financial instability. For traditional companies, in contrast, non-financial IC disclosure keeps its usefulness over time but with an incremental contribution much lower than those of traditional financial performances, such as leverage and ROE. This study expands the existing empirical literature on market impact of IC by showing how investors differently recognize and Bappreciate^ IC management relative to non-financial IC disclosure behaviours. Furthermore, the authors assess how these behaviours differently contribute to the market evaluations over time.