Abstract:
Listed companies in Kenya have experienced firm value volatility over a considerable period of time. Whereas,
disclosures in corporate reports have been linked to firm value, examination of non-financial information related
aspects in integrated reports has not been explored fully. One of the non-financial related component contained
in the <IR> framework is intellectual capital. This research investigates the relationship between intellectual
capital disclosure and value of listed companies in Kenya and South Africa, and examines whether business
model mediates this relationship. The study relied on Positivist research philosophy and grounded on the
stakeholder theory, legitimacy theory and agency theory. The study design was both exploratory and
confirmatory. Out of a population of 209 companies, the study purposefully selected a sample of 137 companies
comprising 19 firms from NSE, Kenya, while, 118 companies were from JSE, South Africa, considered
integrated reporting adopters for the period 2018-2020. Utilizing secondary data obtained from audited
integrated reports and annual financial statements of the sampled companies, the study used descriptive statistics
to summarize the data, with Pearson correlation methods applied to inspect variable associations. The hypotheses
were tested using stepwise regression analysis on the basis of Baron and Kenny (1986) four step mediation
process. The results reveal negative and statistically significant effect of intellectual capital disclosure on value
of firms listed in NSE, while, the effect was positive and statistically significant in respect to JSE, listed
companies. Furthermore, the effect of intellectual capital disclosure on business model was positive and
statistically significant for both countries. Finally, the mediating effect of the business model on the relationship
between intellectual capital disclosure and value of firms listed in NSE and JSE was established. However,
Kenyan listed companies reported inconsistent mediation, as, South African companies data exhibited
complete/full mediation. The study recommends that managers in these organisations should embrace
intellectual capital and business model disclosures for the purpose of improving firm values and legitimization
objectives.
