Intellectual capital disclosure and the fashion industry

Purpose - The purpose of this paper is to examine the nature and extent of intellectual and marketing capital disclosure among fashion companies, specifically to compare intellectual capital (IC) disclosure between European and North American fashion companies as well as between fashion industry sectors. Design/methodology/approach - A coding framework proposed by Guthrie and Petty and adapted by Shareef and Davey was further developed for the fashion context and the top 15 European companies and the top 15 North American companies with accessible 2005 annual reports were analysed. Findings - The voluntary annual report disclosures confirmed brands as highly valuable capital assets, central to competitiveness and differentiation in this industry. Fashion firm disclosures also reflected organisational change processes and philosophies in several cases. However it is concluded that fashion companies do not value the role of the consumer in the brand value dynamic, customer satisfaction, nor customer loyalty as intellectual capital assets. Research limitations/implications - The limitations include the subjectivity of the coding process and because many fashion houses remain in private ownership. Practical implications - Many items of IC are marketing related, however the disclosure of marketing capital and the implications for value adding potential needs better understanding. Traditional accounting practices only partially recognise the value of an organisation's intellectual capital and therefore, the organisation's ability to generate wealth in the future is poorly represented. Originality/value - The findings contribute to the IC disclosure literature in a fresh and unique way by analysing the fashion industry for the first time.