The impact of Intellectual Capital Reporting on Debt Capital: An Empirical Evidence from Listed Companies in The Stock Exchange of Thailand

Abstract

The main objective is to examine the relationship between intellectual capital reporting and debt capital and to examine the relationship between the corporate governance mechanism and intellectual capital reporting. The conceptual model is proposed by illustrating the signaling theory that is useful to describe the relationship between intellectual capital reporting and debt capital. While the relationship between the corporate governance mechanisms and intellectual capital reporting explained by the agency theory, and the information asymmetry. The final sample of the study is 329 firm-year observations from listed companies in the Market for Alternative Investment (MAI), during the year 2015-2019. This study obtains the secondary data and using the unbalanced panel data analysis which the data is collected in cross-section and time series for testing the firm-year observations together.

The finding of this research showed that the overall intellectual capital measured by financial information is negatively associated with debt capital. Also, the overall intellectual capital disclosure of non-financial information is negatively associated with debt capital. In a part of the components of intellectual capital measured by financial information found that human capital is negatively associated with debt capital. Including, the disclosure of components intellectual capital is non-financial information found that as human capital and structural capital not significant with debt capital. While relational capital is negatively associated with debt capital.

Furthermore, the investigation of the relationship between the corporate governance mechanisms and intellectual capital reporting which the corporate governance mechanisms consist of the proportion of independent directors, as a proxy of the board composition. The number of audit committees, as a proxy of the audit committee. The proportion of common stock by the company’s top five shareholders, as a proxy of the ownership structure. The finding shows that the board composition is positively significantly associated with the overall non-financial intellectual capital disclosed, and with the structural capital disclosure. As well as, the finding of the audit committee is positively significantly associated with overall non-financial intellectual capital disclosed, and with the human capital disclosure, the structural capital disclosure. While the ownership structure is negatively significantly associated with the overall intellectual capital in form of financial information and structural capital.

Therefore, the result enhances the theoretical contribution that the value of intellectual capital information about both financial and non-financial information is a signal as supplementing information for the lenders. Meanwhile, the corporate governance mechanisms lead to safeguarding the maximize interests of the firms through the information of intellectual capital reporting. In addition, the firm has a monitor with the board composition and the audit committee in reducing the information asymmetry. The board composition and the audit committee can mitigate the agency problem, while the largest five shareholders tend to use the resource to generate private benefits.

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