Board structure and disclosure of intellectual capital: An empirical study in an emerging market

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Abstract

Capital market regulators have concentrated on company transparency, including and also intellectual capital disclosure (ICD) throughout the previous decade. Jensen and Meckling (1976) stated that high disclosure can reduce agency costs and the uncertainty faced by investors. This research aims to explore the ways the board structure, comprising board size, independence, female board members and CEO dichotomy, affects intellectual capital disclosure within Indonesia. A sample comprising 323 non-commercial companies in 7 industries listed publicly from 2008 to 2017 on Indonesia Stock Exchanges (IDX) was analyzed using ordinary least squares (OLS) regression. This study found a positive and significant impact of board size which implied that a higher total number of members of the board of directors results in a higher extent of ICD. The larger the number of outside board members, the better. This makes the board more independent and allows it to provide a higher level of corporate governance to shareholders. The findings revealed the level of ICD significantly and negatively affected CEO duality statistically. The complete findings indicated robust implications of board structure for ICD. This study may be utilized to facilitate higher intellectual capital awareness and foster ICD execution by IDX capital market administrators.

Keywords: Board Structure, Board Size, Board Independence, Intellectual Capital Disclosure

Authors’ individual contribution: Conceptualization — A.K.; Methodology — A.K., W.W., S.M., and R.Y.; Investigation — A.K., W.W., S.M., and R.Y.; Resources — A.K., W.W., S.M., and R.Y.; Data Curation —R.Y.; Writing — Original Draft — A.K.; Writing — Review & Editing — A.K., W.W., S.M., and R.Y.; Supervision — A.K.; Project Administration — A.K.; Funding — A.K.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

Acknowledgements: The Faculty of Economics and Business of Mulawarman University provided financial support for this research (contract No. 040/UN/2021).

JEL Classification: E44, M13, O34

Received: 11.06.2021
Accepted: 06.08.2021
Published online: 09.08.2021

How to cite this paper: Kusumawardani, A., Wardhani, W., Maria, S., & Yudaruddin, R. (2021). Board structure and disclosure of intellectual capital: An empirical study in an emerging market. Journal of Governance & Regulation, 10(3), 140–149. https://doi.org/10.22495/jgrv10i3art12