Disclosure of intellectual capital in financial reports: case of Latvia

Keywords: intellectual capital, financial reporting, Latvia, survey


Research background: Intellectual capital and its elements, such as reputation, customer relationships, staff competence, are an essential part of a company’s value. However, the issues regarding its recording in company’s accounting books have not been solved. Proper disclosure of an intellectual capital in financial re-ports will increase the transparency of company-related information, thus improving the quality of reporting.

Purpose of the article: The paper aims to investigate the opportunities of intellectual capital disclosure in company’s financial reports from the viewpoint of accounting experts.

Methods: Financial and accounting managers, board members of accounting services, companies and auditors were surveyed, using the authors’ developed questionnaire. The statements regarding the awareness of the intellectual capital and its disclosure-related questions, as well as a respondent profile section were offered to respondents for evaluation. Data was processed in SPSS, applying the method of frequency analysis and categorical Principal Component Analysis (CATPCA).

Findings & Value added: The research results indicate the problem of inconsistency between understanding of intellectual capital and its elements in management theory and accounting practice. The existing accounting standards and regulations do not allow for making a full disclosure of all companies’ assets. Thus, a reliable information about company’s value is not available for shareholders, executives and other stakeholders. The authors suggest using a non-financial reporting practice to reflect the real situation in all companies, irrespective to their status within the meaning of the European Directive on non-financial information disclosure. Current research results will be used for future research and elaboration of recommendations to companies for better disclosure of their assets. Besides, there is a potential for future studies regarding non-financial reporting practice and disclosure of intellectual capital in neighboring countries. 


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How to Cite
Lentjushenkova, O., Zarina, V., & Titko, J. (2019). Disclosure of intellectual capital in financial reports: case of Latvia. Oeconomia Copernicana, 10(2), 341-357. https://doi.org/10.24136/oc.2019.017