Laury Bollen

Linking intellectual capital and intellectual property to company performance

Purpose – The purpose of this paper is to link empirically the value of intellectual capital and intellectual property to firm performance.Design/methodology/approach – Survey data from managers in the (German) pharmaceutical industry is used to conduct a regression analysis focusing on the correlation between human, structural and relational capital, intellectual property and firm performance.Findings – The results of the study show that including intellectual property in models linking intellectual capital to firm performance enhances the statistical validity of such models and their relevance for management.Practical implications – Intellectual capital is an important source of an organizations economic wealth and is therefore to be taken into serious consideration when formulating the firms strategy. This strategy formulation process can be enhanced by fully integrating intellectual property and intellectual capital into management models, as shown in this paper.Originality/value – This empirical pa...

Measuring and explaining the quality of Internet investor relations activities: a multinational empirical analysis

This study extends prior research on the use of the Internet for investor relations (IR) activities by investigating the quality determinants of IR websites. Detailed data on IR website characteristics were collected for 270 companies located in six countries (Australia, Belgium, France, the Netherlands, South Africa and the UK). The results of the descriptive part of this study show that the IR section of its website is an established element in a companys Internet presence as, on average, over half of the 29 IR characteristics were found on the corporate websites. Based on the univariate and multivariate analysis, the variables proxying for company size, level of internationalization (foreign listing and foreign revenue), proportion of shares available to individual investors and disclosure environment are significantly related to the extent of IR activities on the Internet. Also, evidence is found of a significant effect for the level of technology (industry) and the growth rate (ratio of market value to book value) of a company, an effect which for both variables is negative. The results of the study indicate that studies on the use of the Internet for IR activities may benefit from the use of a detailed measure of website quality.

Intellectual capital disclosure and intangible value drivers: an empirical study

Purpose – This paper aims to study the relationship between intellectual capital disclosures (ICDs) and the relative importance of intangible assets as company value drivers.Design/methodology/approach – Annual reports of Swedish, British and Danish firms are analysed to measure the extent of ICD. The level of intellectual capital (IC) in firms, measured with proxies for the categories of human, structural and relational capital.Findings – As to the components of IC, the empirical results indicate that there is a strong significant positive relationship between (the level of) structural capital possession of a firm and the firms ICD.Practical implications – This suggests that firms with a relatively high level of structural capital, disclose more information on IC in the annual report. The study found no such significant association between human and relational capital in firms and ICD regarding these items. Firms might have a transparency drawback in addressing these issues in the reports when these IC ...

Investor relations on the Internet: a survey of the Euronext zone

This study investigates the investor relations activities on the Internet of companies listed on the Euronext stock exchange. For this purpose, the websites of the fifty largest listed companies in each of the countries Belgium, France and the Netherlands were screened for investor relations items. Results obtained by using a three-stage model show that most companies in the Euronext zone are at the second stage of Internet investor relations, i.e. where information available through other sources is combined to better inform investors. In the third stage companies use the full interactive possibilities of the Internet for investor relations purposes. French and Dutch companies use the Internet for investor relations purposes more widely and more intensely than Belgian companies. The study also revealed a size effect; large companies use the Internet for investor relations purposes more extensively than smaller companies. This conclusion holds for each of the three countries. The leading companies in France and the Netherlands are either at the third stage of Internet investor relations or are ready to move to this stage.

Self-serving Bias in Annual Report Narratives: An Empirical Analysis of the Impact of Economic Crises

Consistently, managements explanations of corporate performance in accounting narratives have been found to suffer from self-serving bias. Yet there is no unequivocal evidence as to whether this bias is the product of conscious efforts to manage the impressions of the audience or the result of unintentional cognitive biases. The present study contributes to this discussion by comparing the narratives of the letters addressed to shareholders of Europes most highly-capitalized companies in crisis and non-crisis settings. We find that a crisis situation leads to more extensive use of self-serving bias as adverse external economic conditions are used by managers to present themselves in the best possible light. Given that the letters to shareholders are widely used for capital allocation decisions and considering the evidence that intentional self-serving behavior can be successful, our results imply that investors need to be alert to misleading explanations of performance, particularly during external crises. The International Accounting Standards Board (IASB) has formulated a practice statement proposing non-mandatory guidance on the management commentary that accompanies financial statements. Our results suggest that the quality of narrative information in annual reports is unlikely to be augmented by guidelines that encourage the discussion of corporate performance through the eyes of management.

Fraud detection, redress and reporting by auditors

Purpose - The primary research question of this study is to what extent auditors comply with auditing standards once they encounter fraud and whether compliance is associated with particular fraud characteristics (i.e. material versus immaterial fraud, management versus employee fraud, statutory versus voluntary audit and external versus internal fraud) as well as with auditor (experience) and audit firm characteristics (Big Four versus non-Big Four). The study also aims to provide evidence on the role of auditors in redressing fraud. Redress refers to the auditee taking measures to nullify the consequences of the fraud, insofar as possible, and to prevent any recurrence of such fraud. Design/methodology/approach - To gather data on the role of auditors in fraud cases, a survey was conducted among all audit partners of the top 30 Dutch audit firms. In total, 1,218 audit partners were selected and received a postal questionnaire. In total, 326 questionnaires were returned (27 per cent), of which 296 (24 per cent) were usable. Findings - The results reveal that auditors fail to comply with some important elements of fraud standards. There are substantial differences among audit firms regarding compliance with the relevant auditing standards. Furthermore, auditors appear to encounter corporate fraud only incidentally. About half of the auditors believe they have a “significant” impact on redressing fraud. Research limitations/implications - One of the main research findings is that it is difficult for individual auditors to build up expertise in fraud detection. There appears to be a need for specific training programs for auditors to help them to detect fraud, emphasizing the need for mandatory consultation with the technical department of the audit firm once “red flags” indicating fraud are found. Indeed, this need for change has been addressed by the Dutch professional accountancy body NIVRA as a direct result of the findings of this study. Originality/value - This study extends existing research by investigating the compliance of auditors with fraud standards and it sheds light on the actual redress experiences of auditors. It focuses on the actions taken by auditors – or the lack thereof – in situations where auditors encounter fraud signals. The study indicates that in the absence of good oversight, auditors have mixed incentives when they are confronted with signals for fraud, resulting in actions that are not always in line with existing regulatory requirements.

Best practices in managing investor relations websites: directions for future research

ABSTRACT: This study aims to suggest areas for future research on the quality of Internet investor relations based on a structured analysis of investor relations activities within companies with a high‐quality investor relations website. The study is based on six case studies and examines the organizational structure and processes behind four high‐quality investor relations websites and two low‐quality sites. The study shows that there are particular managerial practices within companies with high‐quality investor relations websites, for six of the seven elements studied. These results indicate that future research on the quality of Internet investor relations should address variables that reflect differences in managerial capabilities and organizational structures with respect to investor relations activities. The relevance of such variables also has theoretical and methodological consequences for future studies. With respect to research on the development and maintenance of investor relations websites w...

An Empirical Assessment of IT Governance Transparency: Evidence from Commercial Banking

We have developed an IT governance disclosure framework to examine how firms communicate their IT governance activities. Using this framework for a sample of 200 commercial banking firms, our empirical assessment indicates that differences in the level of disclosure are systematically related to differences in institutional settings. We also find that firms with relatively good corporate governance practices consider IT performance measurement matters to be highly important when informing and communicating with shareholders.

A stakeholder perspective on mission statements: an international empirical study

Purpose – This study uses a stakeholder perspective to explain the content of mission statements, in particular the inclusion of stakeholder groups. The study uses stakeholder dependency theory and resource dependency theory to explain the content of mission statement. In line with this perspective, stakeholders in this study will be classified as either being resource providers, such as employees and customers, or non‐resource providers, such as the community and the environment. The primary aim of the study is to find evidence for the theoretical relationship between the importance of stakeholders to the company and the inclusion of stakeholder groups in the companys mission statement.Design/methodology/approach – The use of a large dataset with 490 observations enables a multivariate analysis of mission statement content, focusing on country‐, industry‐, and company‐specific factors.Findings – The study finds that stakeholder groups the company is more dependent on, are addressed in mission statements...

Symmetrical versus asymmetrical company-investor communications via the internet

Purpose – In previous studies it remains unclear whether the internet is an effective mechanism for developing a symmetrical and interactive communications process that is initiated by the investor rather than the company. The purpose of this paper is to study the effectiveness of the internet to act as a mechanism to achieve a more interactive communication between companies and investors.Design/methodology/approach – A “mystery investor” approach is used to test whether companies reply to e‐mails from investors. Content analysis was used to study the responsiveness, timeliness and relevance of the answers.Findings – The quality of symmetrical communication (in terms of responsiveness and relevance) appears relatively low. Companies with high‐quality investor relations (IR) web sites do not handle e‐mails more effectively. Therefore, high‐quality asymmetrical communication between company and their investors not automatically associated with a high‐quality symmetrical type of communication.Practical impl...