The Disclosure of Recognised and Unrecognised Intangibles: Evidence from a Mid-Sized Market

Abstract

We examine the reporting of intangible assets and the disclosures on intellectual capital activities by listed companies and public benefit entities in New Zealand, and whether the market perceives these disclosures as useful. We also compare trends in capitalised and expensed intangible disclosure. The most common intangible asset is capitalised software costs, followed by goodwill. Next, we examine intellectual capital disclosures and find there is strong evidence of an increase over time and for sustainability reporters. Intangibles are value relevant, and the results are pronounced when they are more important to the company. Lastly, we consider intangible reporting by public benefit entities and find that, although the rate of intangibles capitalised is similar, there are differences in the intangibles capitalised, and they are of less relative economic importance.

Keywords: IFRS, Intangible assets; Intellectual capital; Intangibles

JEL Classification: M41