Intellectual Capital Disclosure: Influence on Economic Profit of European Pharmaceutical Companies

This study examines the influence of intellectual capital disclosure on economic profit of european pharmaceutical companies. Over the last decade intellectual capital disclosure has become an important subject for many firms, as intellectual capital disclosure is able to improve both financial performance and management effectiveness. Existing studies do not answer the question of how intellectual capital disclosure affects the economic profit. This paper sheds light on it, analyzing companies from pharmaceutical industry, and also defines what level of intellectual capital disclosure is typical for long-term and short-term oriented companies. In this paper we consider listed european pharmaceutical companies with available annual reports for the period 2015-2018; we use content analysis and regression analysis as research tools. Analysis showed that intellectual capital disclosure has a positive impact on the economic profit only in firms, where more information about intellectual capital was disclosed. Moreover this research accepted the theory that long-term companies discose more information about intellectual capital. Therefore, taking into account sector-specific, we propose the following: companies from pharmaceutical industry should disclose more relevant information about intellectual capital, focussing more on relational capital.