Chapter 3 Theoretical framework

• Date: 31 December 2010
• DOI: https://doi.org/10.1108/S1479-3512(2011)0000021011
• Published date: 31 December 2010
• Pages: 25-37
• Author: Indra Abeysekera

CHAPTER 3

THEORETICAL FRAMEWORK

3.1. INTRODUCTION

This chapter describes signalling theory, which is used to interpret the

f‌indings. Section 3.2 outlines the implications of signalling theory as a way

of correcting market failure through voluntary disclosure. Section 3.3

discusses theoretical constructs, outlining independent variables, interaction

of independent variables and mediating variables. Section 3.4 outlines the

empirical model used for linear regression to investigate disclosure signals

and their association with corporate reputation. Section 3.5 outlines the

empirical model developed to investigate the directors’ perception of the

effectiveness of intellectual capital value drivers in enhancing corporate

reputation. It also outlines the approach adopted to compare disparity

between intellectual capital disclosure and directors’ perception of the

ability of drivers to enhance intellectual capital value of corporate

reputation. Section 3.6 provides a summary for the chapter.

3.2. RESOURCE-BASED, SIGNALLING AND

AGENCY THEORETICAL PERSPECTIVE

This study employs three theoretical perspectives to investigate intellectual

capital disclosure practices. The resource-based perspectives and signalling

perspective elucidate how intellectual capital resources are signalled to

stakeholders. The agency perspective investigates the contractual arrange-

ment between owners and managers and their implications for signalling

resources to stakeholders.

25