CAN NONFINANCIAL INFORMATION IMPROVE INTELLECTUAL CAPITAL PERFORMANCE? EVIDENCE BEFORE THE IMPLEMENTATION OF THE EUROPEAN DIRECTIVE EU/95/2014

Recently, disclosure of nonfinancial information is attracting the attention from managers, investors and regulators leading companies to implement relevant changes in several key areas of corporate reporting. This study is motivated by the interest shown by the European Commission that is determining a radical shift from voluntary to mandatory nonfinancial disclosure (EU/95/2014). The aim of this study is to investigate whether nonfinancial information can influence corporate financial performance evaluating the potential effects of Environmental Social and Governance (ESG) disclosure on Intellectual Capital Performance (ICP). Using data from the Italian listed companies, we find that the environmental or overall (ESG) disclosures are positively associated with firm’s enterprise value. Conversely, there is no statistically significant relationship between nonfinancial disclosure and ICP. Our results suggest that investors can use nonfinancial disclosure in assessing the value of shares. Furthermore, listed companies cannot influence the performance of intangible resources using nonfinancial disclosures.