Intellectual Capital in the evaluation process

Abstract: Problem formulation: Traditional accounting and financial reports do not provide sufficient information today. New reports like the Intellectual Capital Statements are one answer to this problem. They systematically report on Intangible Assets that create value in the company. We found that external stakeholders do not use Intellectual Capital Statements in their evaluation processes. This made us wonder; Why external stakeholders, in this case banks, do not consider non-financial information, like the Intellectual Capital statement, in a systematically manner when evaluating companies. Purpose: The purpose of our thesis is to find out why banks do not consider non-financial information systematically, when evaluating companies. We hope that our thesis will start a learning dialogue within banks on how they will handle non-financial information, in order to improve their evaluation processes. Method: Our thesis is created through an interaction between the deductive and the inductive way. The investigation is made according to the hermeneutic spiral, which combines theory with the empirical work. Primary and secondary data has been gathered through a qualitative approach. By attending two milestone conferences with world renowned thought leaders in the field, we have collected as updated information as possible about newly proposed approaches. Interviews have been made at different departments in the Danske Bank group. Conclusion: Many reasons were given, but it appears as the major answers to our purpose are: there is a lack of a standard for the Intellectual Capital Statements and no commonly accepted terminology. This makes it almost impossible to make comparisons between different years and companies. They are not functional in their present shape and there is a lack of stringency. Another reason is that too few companies are reporting Intellectual Capital Statements. The financial statements are the ones that still are the most important information sources in the decision-making process.