Intellectual Capital Disclosure Quality : Lessons from Selected Scandinavian Countries

Intellectual Capital (IC) is a non-monetary asset that can generate future economic values in companies. Contemporary school of thought has now begun to recognize the importance of non-financial factors, particularly IC (which is always off the balance sheet) in addition to financial measures for investment decision. Therefore, the purpose of the study is to explore the implementation issues of IC disclosure. Taking into account the legitimacy theory which underscores the importance of ‘social contract' between an organization and the society, a series of in-depth interviews were conducted to investigate the issues related to the implementation of IC guideline in Denmark and Sweden. The result shows that the central motive in disclosing the IC information is to communicate corporate culture, strategy and future direction for the purpose of branding. The interview reveals that there are five other secondary motives emerging from the incentive to communicate information to stakeholders, i.e., (1) to retain and attract quality employees; (2) to retain and attract customers of company products; (3) to lobby for more synergetic collaborations with partners; (4) for the society; and (5) to manage the perceptions of the capital market. Issues highlighted in this study can provide some guidance on the implementation of IC disclosure in Malaysia and other parts of the world