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Intellectual capital and analyst forecast: evidence from the high-tech industry in Taiwan

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  • Wen-Hsin Hsu
  • Yao-Ling Chang

Abstract

This article investigates the relation between the disclosure of intellectual capital and analysts' forecasts based on the Taiwanese high-tech industry. We hypothesize that corporate disclosures can be important means for management to communicate firm performance to outside investors and the firms that provide extensive coverage of intellectual capital can reduce the information risk in analysts' forecasting process. We find that firm-specific disclosures of intellectual capital relates negatively with analysts' forecast errors and dispersions. While many companies are concerned that the disclosure of intellectual capital can damage their competitive position in product markets, our results suggest that firms can reduce the information risk with voluntary disclosures on intellectual capital.

Suggested Citation

  • Wen-Hsin Hsu & Yao-Ling Chang, 2011. "Intellectual capital and analyst forecast: evidence from the high-tech industry in Taiwan," Applied Financial Economics, Taylor & Francis Journals, vol. 21(15), pages 1135-1143.
    • Handle: RePEc:taf:apfiec:v:21:y:2011:i:15:p:1135-1143
    DOI: 10.1080/09603107.2011.564129
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    1. Gary K Meek & Clare B Roberts & Sidney J Gray, 1995. "Factors Influencing Voluntary Annual Report Disclosures By U.S., U.K. and Continental European Multinational Corporations," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 26(3), pages 555-572, September.
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    3. Ole†Kristian Hope, 2003. "Accounting Policy Disclosures and Analysts' Forecasts," Contemporary Accounting Research, John Wiley & Sons, vol. 20(2), pages 295-321, June.
    4. Amir, Eli & Lev, Baruch, 1996. "Value-relevance of nonfinancial information: The wireless communications industry," Journal of Accounting and Economics, Elsevier, vol. 22(1-3), pages 3-30, October.
    5. Verrecchia, Robert E., 2001. "Essays on disclosure," Journal of Accounting and Economics, Elsevier, vol. 32(1-3), pages 97-180, December.
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    Cited by:

    1. Ann Ling-Ching Chan, 2012. "Innovation activity and corporate financing: evidence from a developing economy," Applied Financial Economics, Taylor & Francis Journals, vol. 22(20), pages 1665-1678, October.
    2. Jincheol Bae & Wonchang Hur & Jaehong Lee & Jaimin Goh, 2017. "Patent Citations and Financial Analysts’ Long-Term Growth Forecasts," Sustainability, MDPI, vol. 9(5), pages 1-15, May.
    3. Robert Rieg & Ute Vanini, 2023. "Value relevance of voluntary intellectual capital disclosure: a meta-analysis," Review of Managerial Science, Springer, vol. 17(7), pages 2587-2631, October.

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