Intangibles Disclosure: Evidence from Annual Reports of the Jordanian Industrial Public Listed Companies

This study investigates the disclosure practices pertaining the intangible assets (IA), given the limited attention given to intangibles reporting in the developing countries. Specifically, this paper documents the disclosure practices, both mandatory and voluntary, related to intangibles by the industrial Jordanian firms, and to what extent they do report information about IA. This study contributes to the literature by providing empirical evidence from a developing country’s business environment. Based on relevant literature and the requirements of accounting standards (namely, IAS38), we apply a research index that consists of 24 ‘general and technical’ items on 69 publicly listed companies classified under the industrial sector at Amman Stock Exchange (ASE) for the year 2012. Our findings suggest that most of the investigated firms either disclose a minimal amount of information about IA or not at all, which indicates that the concept of IA remains ambiguous and is neglected. The overall percentage of intangibles’ disclosure as per the research index is only 9.7%. Consistent with the extant literature (such as Kumar 2013), our results indicate that intangibles’ technical disclosure is associated with the market capitalization, whereas the intangibles’ general disclosure (non-technical) is linked to the firm’s sub-sector. The findings of this research raise concerns about the firms’ reporting efficiency in communicating their ability to maintain, create and sustain innovation within their business environment on the long run.