The Impact of Intellectual Capital Disclosure on Capital Markets: An Overview

According to GAAP , intellectual capital is the value of firms intangible assets that aren't reflected on the balance sheet. Intellectual capital is defined in different ways: The OECD describes intellectual capital as the economic value of two categories of intangible assets of a company: (a) organizsational (structural) capital and (b) human capital. Structural capital can be further disaggregated into internal and external capital (Schneider and samkin, 2007). Roos et al (2005) define intellectual capital as all non - monetary and non - physical resources that are fully or partly controlled by the organization and that contribute to the organizations value creation (Peng et al. 2007). Intellectual capital can be described as structureal capital, relational capital and human capital. sveiby (2004) first proposed a classification for ic into three broad areas of intangibles viz, human capital, structural capital and customer capital a classification that was later modified and externded by replacing customer capital by relational capital (bhasin, 2008). According to davis (2001) structural capital encompasses the hardware, software, database, systems, work processes, businessmodels, organizational structure, patents, trademarks, trade secrets and all other codified knowledge. Relational capital is defined as all resources linked to the external relationships of the firm, with customers, suppliers, or partners in research and development. it comprises that part of human and structural capital involved with the companys rwlations with stockholders (investors, creditors, customers, suppliers), plus the preceptions that they hold about the company (starvoic and marr). it also includes the image of the image of the organization in the market, its social identity and brand equity (mageza, 2004). Schultz (1993) define the term human capital as a key element in improving a firm assets and employee in order to increase productivity as well as to sustain competitive advantage. Human capital is the combined capabilities, knowledge, skills, experience, innovativeness and problem - solving abilities of each individuls knowledge (davis and Harrison, 2001). human capital involves processes that relate to training, education and other inverventions in order to increase the levels of knowledge, skills, abilities, values and social assets of an employee which will lead to the employees satisfaction and performance and eventually on a firm performance (Rizvi, 2010).