Intellectual Capital Disclosure in Portuguese Listed Companies: A Longitudinal Approach

The demand for greater disclosure, including Intellectual Capital Disclosure (ICD), has significantly increased among users of accounting information. The European Union has already recognized the relevance of non-financial disclosure through different Directives. In Portugal, the implementation of Decree-Law No. 89/2017 strengthened this requirement. This study aims to determine the extent and quality of ICD disclosures of Portuguese companies listed on the Lisbon Stock Exchange (PSI) between 2016 and 2020, as well as the evolution of such disclosures, considering the impact of the implementation of Decree-Law No. 89/2017 and the effects of the COVID-19 pandemic crisis. It also aims to assess the effect of certain factors on the ICD quality index, specifically company size, the number of board members, the proportion of women on the Board of Directors, and financial performance. A content analysis of 60 Sustainability and Integrated Reports from 15 PSI-listed companies was conducted over a five-year period. Based on this analysis, extent and quality indices for ICD were developed. Subsequently, a multiple linear regression model was applied to verify the effect of the mentioned factors on the quality of IC disclosure. The results show that PSI-listed companies exhibit a satisfactory level of IC disclosure in terms of extent. However, the quality of the disclosed information remains below the extent index. Additionally, a gradual, albeit not sharp, increase was observed in both extent and quality indices over the five years analyzed. Regarding the factors influencing ICD quality, the results showed that the proportion of women on the board of directors does not significantly impact disclosure quality. This study contributes to understanding the evolution of ICDs after the implementation of Decree-Law No. 89/2017 in Portugal. It also facilitates a deeper understanding of the factors that motivate Portuguese-listed companies to disclose IC in their reports. The results indicate that challenges remain in improving ICD quality. The practical implications of this study are relevant for managers, investors, and regulators as they provide insights into the factors affecting IC disclosure and encourage the development of more effective reporting practices. Factors such as company size and the number of board members can significantly influence the quality of ICDs.