Intellectual capital reporting: can a strategy perspective solve accounting problems?

During the last decade, many calls for improving disclosure practices, in relation to intellectual capital and intangibles, have been uttered in the standard setting, academic, and business communities. There seem to be two types of solutions to this problem. One angle of attack is to seek to improve transparency through implementation of global accounting standards, and moving from historic value to fair-value practices. Another way of dealing with the problem is to step outside the accounting paradigm to see if transparency and relevance problems can be solved by way of supplementary disclosures. For some, this is a logical step. However, for many, this represents shaky ground. It is ironic that while supplementary information has been shown to reduce investors’ uncertainty, it is not being acknowledged as a key element in solving the existing problems by standard setters and academics. This chapter is a wake-up call to the drowsy constituents of academia and policy making, asking them to see beyond their normative accounting paradigm and in turn, showing them how far the strategy-oriented solutions they choose to ignore have come. In this chapter, we thus illustrate for the reader how reporting and management of companies’ knowledge resources and intellectual capital is possible through the strategic ideas of the Danish guideline for IC statements