The trends of intellectual capital disclosures: evidence from the Nigerian banking sector

Purpose - This paper longitudinally examines the intellectual capital (IC) disclosure practices of Nigerian banks following the restructuring exercise and the subsequent policy changes in the Banking sector. Design/methodology/approach - Content analysis of annual reports of the banks was carried out over a period of four years (2006-2009), a period following the consolidation exercise and the subsequent introduction of the mandatory code of corporate governance. A self-constructed IC disclosure checklist was used to measure the extent of IC information disclosed in the annual reports. A number of statistical techniques were performed to assess the trend of IC disclosures and compare the IC disclosure categories. Findings - The results show that the overall IC disclosures of the Nigerian banks increased moderately over the four year period. Human and internal capital disclosures dominated the banks' IC disclosures, with only internal capital disclosures showing a significant increasing trend over time. Research limitations/implications - The increasing trend of IC disclosures of the banks suggests that the introduction of the mandatory code of corporate governance had positive implications on IC reporting practices. Hence, the findings of this study give support to previous research that established a strong positive association between IC disclosures and corporate governance development. However, this study only examines the IC disclosures of Nigerian banks following the reformation of the banking sector. Future research should incorporate other countries experiencing similar regulatory changes. Practical implications - The introduction of the corporate governance code might have positively influenced the IC disclosure practices of the banks. However, the results had shown that the IC disclosures were mainly inconsistent and discursive in nature. Hence, the regulatory authorities, accounting setters and other relevant government agencies may wish to devise a detailed IC reporting framework for the banking sector. Originality/value - Despite the significance of the banking sector to any economy, the IC disclosure practices of the banks largely remained unexplored. This study provides a much needed longitudinal assessment of the IC disclosures in the case of Nigerian banks following a major consolidation exercise and the introduction of a mandatory code of corporate governance specifically designed for the banks. The study also represents the first empirica