Intellectual capital disclosure by Chinese and Indian information technology companies A comparative analysis

Purpose - The purpose of this paper is to examine the extent and quality of voluntary intellectual disclosures by information technology (IT) companies of China and India. Design/methodology/approach - The research method adopted for this study is content analysis. The research is limited to the intellectual capital information disclosed in companies' annual report. The sample for this research is based on 20 IT companies listed by market capitalization listed on Shenzhen or Shanghai stock exchange market, and the largest 20 companies listed on Indian stock market. Findings - Indian IT companies tends to perform better than Chinese IT companies in extent and quality of disclosures. The extent of disclosure of both countries is at a relatively high level. The most frequently reported disclosure category in India is external capital, while the least one is human capital. In China, external capital is the most frequently disclosed category, while the internal capital is the least one. Research limitations/implications - The sample size of the study is relatively small. Future research can expand on the sample size to get an overview of the intellectual capital disclosure, and conduct a longitudinal study to capture the trend of reporting practices. Practical implications - The findings of this study have implications for policy makers and standard setters for rethinking of inclusion of intellectual capital disclosure in annual reports as compulsory items. This will not only add tot he quality of information but various stakeholders will be able to make an assessment of the values of a firm. Originality/value - Previous studies of intellectual capital (IC) disclosure have covered little on the relationship between market capitalization and quality of disclosure and cross-country disclosure on IC. This research tends to extend the literature on IC disclosure.