REPORT ON THE RESEARCH ACTIVITY
Academic years 2014 – 2017Integration of Intellectual Capital in Financial Reporting: Understanding Key
Performance Indicators through Business Model Disclosure
Anna Khasyanova
PhD student
Dottorato di ricerca in
Economia Aziendale e Management
XXX ciclo 2014/2017
Università degli Studi di Pisa
Francesco Giunta
Professore ordinario, supervisor
Dipartimento di Scienze per l'Economia e l'Impresa
Università degli Studi di Firenze
Within the three years of PhD Programme in Business Administration and Management – Regional Joint PhD between Università degli Studi di Firenze, Università degli Studi di Siena and Università degli Studi di Pisa, in the ambit of the action “Pegaso Scholarships – International PhDs” – the academic activities undertaken by me had multiple directions. The increased personal professional qualification and competence together with the elaborated doctoral dissertation are considered to be the main outputs of the Course completion. The detailed discussion of the main academic activities and achievements is presented below.
I. Doctoral Courses and Lectures – University of Pisa, University of Florence and University of Siena
During the first and second years of the PhD Programme in Business Administration and Management multiple courses were organised by the professors of University of Pisa, University of Florence and University of Siena, which became an important basis for the research project initiation.
Among the PhD courses a particular interest for me represented such modules as International Accounting, Intellectual Capital, System Dynamics and Cost Management. Several lectures were devoted to clarifying the issues related to the appropriateness of different research approaches, methodologies and methods applied to a certain type and subject of an academic research.
Besides, especially useful for me were lectures aimed at providing students with the methodological and practical advice concerning the execution of an academic research, writing academic articles, as well as clarifying the process of submitting a paper to and publishing it in domestic or international scientific journals.
The lectures were also accompanied with the seminars where I had an opportunity to carry out practical tasks and assignments (e.g. written reports, presentations, discussions, some tutorials in computer classes). In addition, some courses were accompanied with the lectures of professors invited from foreign universities which, in my opinion, made then more interesting and broad minded.
List of the Attended Courses
Titolo del corso durata (indicare Università o altra sede Sede in cui si è svolta l’attività)
Docente (nome e cognome) Corporate Governance 14 hours Università degli Studi di Firenze C. Ciappei Corporate Social
Responsibility 14 hours Università degli Studi di Firenze L. Bagnoli Financial Analysis 14 hours Università degli Studi di Firenze F. Giunta Intellectual Capital 14 hours Università degli Studi di Firenze G. Liberatore Marketing Management 14 hours Università degli Studi di Firenze G. Aiello Organization Behavior 14 hours Università degli Studi di Firenze V. Cavaliere Accounting History 14 hours Università degli Studi di Siena R. Di Pietra Entrepreneurship and
Innovation Management 14 hours Università degli Studi di Siena R. Zanni International Accounting 14 hours Università degli Studi di Siena R. Di Pietra Management Control System 14 hours Università degli Studi di Siena A. Riccaboni Public Accounting and Public
Governance 14 hours Università degli Studi di Siena R. Mussari System Dynamics 14 hours Università degli Studi di Siena F. Barnabè Auditing 14 hours Università degli Studi di Pisa G. D'Onza Business Valuation and Value
Creation 14 hours Università degli Studi di Pisa E. Gonnella Cost Management 14 hours Università degli Studi di Pisa R. Giannetti Financial Reporting 14 hours Università degli Studi di Pisa M. Allegrini Management Information
System 14 hours Università degli Studi di Pisa L. Marchi Organization Theory 14 hours Università degli Studi di Pisa M. C. Bonti Public Management 14 hours Università degli Studi di Pisa L. Anselmi
/S. Lazzini Research Methods 28 hours Università degli Studi di Pisa D. Dalli
/E. Giuliani Strategy 14 hours Università degli Studi di Pisa S. Bianchi
Martini Introduction to Econometrics 20 hours Università degli Studi di Pisa E. Giuliani
II. The Research Project 2.1. The research project summary
“Integration of Intellectual Capital in Financial Reporting: Understanding Key Performance Indicators through Business Model Disclosure”
The present research aims to understand whether key performance indicators (KPIs) published in companies’ annual reports are really able to shed a light on companies’ performance and to address the gap in the literature related to revealing the factors that can explain the quality level of KPI disclosure.
The core assumption of the research is that Business Model (BM) disclosure bridges the KPI communication gap between management and external stakeholders. BM disclosure gives a user the possibility to identify, understand and analyse the value drivers of the company. Consequently, a user can verify the ‘keyness’ of published KPIs and evaluate the quality of KPI disclosure by anchoring of each indicator to the value drivers (i.e. BM components) that are communicated in the same report. Thus, linkage to BM components is a core assumption of a performance indicator being relevant to the business – being really ‘key’.
Applying the BM ontological approach developed by Osterwalder (2004), we conducted a content analysis of narrative BM disclosures included in the Strategic Report. Then, the KPIs published in the same reports were linked to the BM disclosures – were attributed to the coded BM components identified through the content analysis of BM disclosure. The quality of KPI disclosure was measured by means of complex Disclosure Index method which was developed for the purpose of this research. Last, the statistical analysis was performed in order to identify the factors of KPI disclosure quality.
The sample consists of 80 UK listed companies operating in 3 high-tech industries – Information and Communication Technology; Industrial Goods and Services; Oil & Gas, Chemicals and Mining.
The research revealed the fact that currently companies make a lot of efforts to communicate their value creation model to investors by publishing BM narratives as well as numerous KPIs, however, mostly they do not succeed at demonstrating the linkage between the BM and KPIs disclosures. At the same time, we found that among the company-specific parameters such as size (total assets), level of indebtedness (financial leverage), profitability (return on assets), corporate governance (the proportion of non-executive directors), ownership structure (the proportion of institutional ownership) and industry (capital intensity and market-to-book divergence), only companies’ size and an industry parameter market-to-book divergence appeared to be positively statistically significant for explaining the KPI disclosure quality.
This research represents an explorative analysis of current KPI disclosure policies of the companies. The research contributes theoretically to the debate concerning entangling performance indicators to the value creation story of the company. It was proposed a technique applicable in narrative disclosure field which verifies a performance indicator being really ‘key’. It was developed a method of KPI disclosure quality measurement.
Practically, the research findings can be useful for companies’ managers when making improvements into their KPI disclosure policies, as well as to the standard setters and policy-makers when making interventions into performance indicators’ communication.
2.2. Professional competence and skills acquired throughout the process of research project development
The execution of the research project is inevitably associated with scrutinising the literature, both topic- and methodology-related. The studied literature can be divided into different groups on the basis of its main subject. Among them a substantial block of the literature was directly devoted to the topic of my research, namely Narrative Disclosures, Business Model, Intellectual Capital, Non-financial Information and Key Performance indicators. Another block of the literature was devoted to the methodological aspects of the research and included such topics as Philosophy of Research, Empirical Research in Accounting, Research Method and Methodology in Finance and Accounting, Content Analysis Methodology, Disclosure Index Methods, Statistical Analysis Methods. The literature included books, academic articles related to different subjects as well as normative documents, guidelines, frameworks and recommendations released by regulators and policy-makers. A thorough study of high volumes of the related literature1, undoubtedly, increased my personal competence on the research topic.
On the other hand, execution of the research delivers the essential practical skills of performing the research project. Such research stages as data collection, methodology and method development, writing working papers and presenting them to the colleagues helped me to acquire an important experience of working in academic environment.
III. Participation in the Academic Conferences and Workshops
Over the three years of PhD programme I had an opportunity to participate in domestic and international conferences and workshops that contributed to the development of my research project. The list of attended conferences and workshops is presented as follows:
1. Financial Reporting and Business Communication Conference, University of Bristol, UK, 30 June – 1 July 2016
Presented working paper – “Are Key Performance Indicators in Annual Reports Really Key?”;
2. 12th Interdisciplinary Workshop on Intangibles, Intellectual Capital and Extra-Financial Information, EIASM, National Research University – Higher School of Economics, St. Petersburg, Russia, 22 – 23 September, 2016
Presented working paper – “Are Key Performance Indicators in Annual Reports Really Key?”;
3. PhD Workshop “Financial Markets and Corporate Strategies: Comparative Studies”, held within the XVIII April International Academic Conference On Economic and Social Development at the National Research University Higher School of Economics, Moscow, Russia, 11 – 14 April, 2017
Presented working paper – “Are Published KPIs Really Able to Shed a Light on Companies’ Performance?”;
4. 13th Interdisciplinary Workshop on Intangibles and Intellectual Capital, EIASM, University of Ancona, Ancona, Italy, 21 – 22 September, 2017
Presented working paper – “Are Published KPIs Really Able to Shed a Light on Companies’ Performance?”.
Participation in the conferences and workshops made an important contribution to my personal and the research project development, namely, an experience to publicly present the working papers and meeting and keeping in touch with the colleagues from all around the globe. Besides, the feedback provided by the audience during the presentations delivered certain research improvements.
IV. PhD Visiting Abroad
Apart from being abroad with the purpose of participation in the international conferences and workshops, I also undertook the external PhD visiting to the foreign universities, which was a compulsory requirement of the action “Pegaso Scholarships – International PhDs”.
4.1. National Research University – Higher School of Economics (Moscow, Russia)
First, I visited The National Research University – Higher School of Economics (Moscow, Russia), starting from the 5th of February till the 3rd of May 2017. The purpose of my visiting was to improve the methodological aspects of the research project under the supervision of prof. Alexander M. Karminsky, Faculty of Economic Sciences, Department of Finance.
The major work was divided into three main stages in order to better organise the process and to ensure timely outcomes:
1. Exploring the new literature with the aim at developing the ideas and collecting the references that underpinned the methodological part of the research;
2. Data preparation – transformation of the analytical qualitative data, that was prepared by me beforehand, into quantitative expressions using the developed ideas in order to perform further statistical analysis. Also, the additional quantitative data required for the analysis was collected;
3. Performing the statistical analysis and obtaining the preliminary results.
Within this visiting period I attended XVIII April International Academic Conference On Economic and Social Development at the National Research University Higher School of Economics (as was mentioned before), where I had an opportunity to present the preliminary results of the research project and receive a feedback and reflections from the audience.
Besides, I was back to the HSE for additional, short-term visiting period, starting from the 17th
till the 29th of October 2017. During these days, on the 18th of October, I took part in the research seminar, organised by Alexander M. Karminsky entitled “Empirical Studies in Banking”, which was focused on the application of statistical methods in finance. The attendance of the seminar, accompanied with a couple of further consultations with prof. Karminsky helped me to improve the quality of the statistical tool included in the research methodology. The doctoral thesis was finalised by the end of this visiting.
4.2. University of Aalborg (Aalborg, Denmark)
For the second visiting I was admitted to the University of Aalborg (Aalborg, Denmark) with the purpose of improvement of the methodological aspects of the doctoral thesis and its completion under the supervision of prof. Christian Nielsen (research group “Business Model Design Center”, Department of Business and Management, Faculty of Social Sciences), starting from the 2nd of August till the 17th of October 2017.
The research goals achieved during this period are represented as follows:
1. Following the recommendations of prof. Nielsen, the literature review of the doctoral thesis was updated by inclusion of the recent papers’ overview;
2. The research methodology applied in the thesis was improved (the content analysis reliability was enhanced and the improved disclosure index was constructed) that allowed to increase adequacy of the research output;
3. Last, the doctoral thesis was structured and completed, except for the section devoted to the results of statistical analysis and conclusion.
During this visiting I attended the mentioned before 13th Interdisciplinary Workshop on Intangibles and Intellectual Capital in Italy, where I presented the improved research methodology that was developed during my stay at the Aalborg University and received a feedback from the international colleagues.
To conclude, the main research goals were accomplished during the discussed above PhD visiting periods, thus, the stay at the National Research University – Higher School of Economics (Moscow, Russia) and Aalborg University (Aalborg, Denmark) can be characterised as fruitful.
V. Additional Activities
In spring 2015 I attended an additional course of Financial Statement Analysis (English version) in order to increase my personal competence concerning preparation and formation of financial statements. The course was organized for master students of University of Florence and taught by my supervisor prof. F. Giunta. A half of the course’s academic hours were devoted to practical assignments and preparation of written reports, that witnessed the results of the work performed (in the form of presentations and discussions). Thus, I took part in practical assignments related to analyzing and reengineering companies’ financial statements (BS, P&L, CF statement), as well as conducting its Profitability and Solvency analysis. In addition, some practical seminars were organized in computer classes with the aim at providing a tutorial on AIDA database.
The year after, in spring 2016, I assisted prof. Giunta with the same course (English version), and my contribution consisted of helping and consulting the students throughout performing their practical assignments since I had become familiar with the course programme due to my attendance of the course the year before. Interacting with students gave me a valuable experience since teaching represents an important part of my further desirable occupation.
Coming to the conclusion, I must say that the three years of PhD Programme in Business Administration and Management – Regional Joint PhD between Università degli Studi di Firenze, Università degli Studi di Siena and Università degli Studi di Pisa – contributed significantly both to my professional and personal development. Apart from finalising the doctoral thesis that gives me an opportunity to receive a doctoral degree and enhance my future occupation prospects, completion of the programme delivered a valuable personal experience of working and living abroad, meeting international colleagues and make new acquaintances, as well exploring the local language and culture. I am completing the course experiencing the overall satisfaction.
dott.ssa Anna Khasyanova ________________
Date 24.10.2017
prof. Francesco Giunta ________________
