Intellectual Capital Disclosure and Initial Public Offerings: Evidence from Hong Kong

This paper presents the findings of a study of the impact of intellectual capital disclosure on the initial public offering IPO) of shares listed on the Hong Kong Stock Exchange, which has been the largest IPO market in the world since 2009. One of the indicators of the success of an initial public offering is its subscription rate, which can be used as a proxy for the level of investor confidence in the stock being offered. The impact of intellectual capital disclosure, as part of voluntary disclosure, is examined by constructing a disclosure index. Correlation and regression analyses are employed to study its relationship with the subscription rate of an initial public offering. It is found that intellectual capital disclosure is a significant factor influencing the subscription rate, and that the extent of its impact depends on the type of information being disclosed. The evidence from Hong Kong contributes to the debate on the effect of voluntary disclosure on capital markets in general and of intellectual capital disclosure on IPOs in particular. Copyright (C) 2012 JAEBR