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Intellectual capital [IC] is regarded as a strategic asset o f firms, which is potential of creating
value. However, the measurement of intellectual capital is extremely difficult and as a result
mere disclosure o f IC information in annual reports do not show the impact of value of IC in the
financial position of a firm. Main objectives of this study are to develop an IC disclosure (ICD)
index to measure the extent and quality of ICD and to examine determinants o f ICD practices and
their impact on ICD practices based on 50 companies listed on Colombo Stock Exchange (CSE)
for the period from 2010 to 2014 by using a content analysis and questionnaire survey.
Companies were selected in the order o f market capitalization and the data was collected from
annual reports. 20 disclosure items representing Internal Capital Disclosure (InCD), External
Capital Disclosure (ECD) and Human Capital Disclosure (HCD) are included in the index. Data
was analyzed using parametric tests, correlations and panel regression analysis based on pooled
regression. Study finds that that there was a common increasing trend for disclosure of IC items
and categories. Majority of listed companies disclose IC different forms such as text, sentences,
pictures, tables and graphs in line with core discipline o f Global Reporting Initiative [GRI]
guidelines. ECD was mostly reported in the annual reports followed by HCD and InCD.
Theoretical framework o f the study takes into account agency theory, stakeholder theory,
legitimacy theory and signaling theory. The study offers an insight to the corporate and business
level managers, policy makers, potential investors and future researchers regarding ICD
practices in terms of extent and quality
