Sri Lankan Intellectual Capital Disclosure: An Empirical Analysis

Abstract

This study examines voluntary Intellectual Capital (IC) disclosure provided by Sri Lankan firms in annual reports from the year 2016/17. A 100-firms sample, from the Colombo Stock Exchange (CSE)-listed firms. Findings suggest that Sri Lankan firms, on average, are aware of the significance of IC disclosure. Concerning the descriptive analysis, the results indicate that most of the information reported (41 percent) is related to human capital; 31 percent is related to relational capital and the 21 percent concerns structural capital disclosure. The results also suggest that industry nature and firm size play a key role as a determinant for the disclosure of IC in Sri Lankan annual reports. As there is no definite IC disclosure framework has been established within Sri Lankan firms. Concurrently as Sri Lanka passes through its post war-recovery phase, reform of its mutually agreed financial reporting framework is essential to reduce information asymmetry and therefore reducing the agency costs.