Management decisions regarding the voluntary disclosure of information: The problem of the recognition of the firm's intellectual capital and that of lenders' information needs

Abstract

We analyse data on Italian listed companies quoted on the Milan stock exchange which perform R&D (Research & Development) activity. We find there is a positive relationship between R&D activity and voluntary disclosures of additional information that: a) regards R&D assets in themselves, in line with theoretical predictions according to which voluntary disclosure makes up for shortcomings in the current financial accounting model; b) is relevant to lenders' interests, in line with the fact that quoted Italian firms are highly dependent upon lenders. Owner-managers of quoted Italian firms show, moreover, a significant tendency to augment additional information provided to lenders in the event of losses (negative earnings).