Intangible assets in annual report: a disclosure index

Introduction of the IAS/IFRS entails important changes for Italian companies, characterised by civil law accounting culture, including assessment and accounting of intangible assets which is one of the most fundamental issues. Our attention focuses on companies listed in the main Italian Stock Exchange Indexes (S&P/Mib, Star and TechStar) in which the intangible assets are some of the most critical elements of company management. After a brief comparison between IAS 38 and Italian law, the aim of this paper is to study the effects of IAS 38 application on financial disclosure via an empirical analysis. The level of disclosure regarding the intangible assets is summarised via the construction of a “disclosure index” and is studied in greater depth by identification of the possible influencing factors. In the paper the focus is on disclosure since, as the scholars also agree, financial communication does not represent a neutral process but affects the behaviour of the recipients, and consequently that of the preparers. Financial statements as of 31st December 2005, which are the first IAS/IFRS-compliant documents, will be analysed.