Is IC disclosure explain the market value of Indian Knowledge Companies?

This paper aims to examine the effects of intellectual capital (IC) disclosure in the annual reports of Indian Knowledge companies listed in Bombay Stock Exchange (BSE) on their market capitalization (MCAP).

The paper uses secondary data collected from the published annual report of Indian Knowledge companies for the years 2009 to 2012. A disclosure index was used to measure the extent of IC information disclosed in the annual reports. The market capitalization data are collected from the BSE database. The panel data are analyzed using regression analyses.

The paper finds that the extent of IC disclosure by Indian listed Knowledge companies has a positive effect on their market value. In addition to that the study reveals that there is significant impact of the control variables on the market capitalization.

The empirical findings show that IC information disclosed by the Indian listed knowledge companies positively affects their market capitalization. Therefore, it means that the IC information is value relevant to the capital market participants. These findings signal towards the need for more IC disclosure of Intellectual Capital related information. In addition, the findings could be useful for the regulatory bodies to develop guidelines on IC disclosure to enhance transparency and increase confidence in the capital market.