A Longitudinal Study on Determinants of Intellectual Capital Disclosure in Indonesian Prospectuses

This study examines the determinants of intellectual capital disclosure (ICD) in the Indonesian Initial Public Offering (IPO) prospectuses. The sample of this study consists of 280 prospectuses issued from 1990 to 2017, which were chosen by dividing the study period into 7 clusters and 40 prospectuses from various industrial sectors were selected from each of the four-year clusters. ICD data was collected using content analysis based on an 86-point disclosure index. Data is then analysed using descriptive statistics and multiple regressions. We find that ICD in the Indonesian IPO prospectuses are still relatively low, with an average of 16.63 points from the 86 points listed in the index. Of the seven factors deem related to ICD: company size, age, leverage, underwriter reputation, auditor reputation, year and Industry; it was only found that the company size and year had positive and significant relationships with the ICD; whereas, leverage, company age, auditor reputations and industry, have no significant relationships with ICD. When the data were divided into two categories to run sensitivity tests, no variable of the company has a significant effect on ICD in the pre-millennium era, whereas of the post-millennium data set, the results are consistent with the main results reported above. This shows that the ICD became more prominent in the Indonesian prospectus only after 2000. Thus, future research can investigate whether time period is an important determinant of ICD in other countries. This study makes an important contribution to the IC literature given that it provides the first longitudinal empirical evidence on ICD determinants in the Indonesian IPO prospectus, which might be useful for the academic community, regulators, Indonesian professional bodies to assess whether to further emphasize IC reporting practices.