Critical Perspectives on Accounting 20 (2009) 847–854

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Critical Perspectives on Accounting

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Discourses of transparency in the intellectual capital reporting debate:Moving from generic reporting models to management definedinformation

Christian Nielsen ∗, Mona Toft MadsenAalborg University, Department of Business Studies, Fibigerstræde 4, 9220 Aalborg Øst, Denmark

a r t i c l e i n f o

Article history:Received 13 July 2005Received in revised form 18 December 2007Accepted 18 September 2008

Keywords:TransparencyIntellectual capitalBusiness reportingDiscourse analysis

a b s t r a c t

In the last decade, transparency has become a necessary mantra for both publicly listedcompanies and government institutions. Intellectual capital reporting is often related tothis goal of enhancing the transparency of business and public institutions. In this paper weemphasize that a movement is seen in the intellectual capital reporting debate, which weargue can be approached as two different discourses of transparency, namely one discoursebased on generic reporting versus a second discourse based on management driven infor-mation. In other words, one discourse highlights as much information to stakeholders aspossible, but seems to be in the process of being substituted by another, which emphasizesreporting what is seen from the perspective of management, namely the “right” informa-tion, and only that. The argument for the latter discourse is that it will make intellectualcapital reporting more transparent, because of users’ bounded rationality and other con-straints such as time. This, however, has the implication that users of intellectual capitalreporting may become victims of management’s selected “right” information, by [Strath-ern, M. The tyranny of transparency. British Educational Research Journal 2000;26:310–32]designated as the “tyranny of transparency”. Also, we emphasize the problems of perceivingtransparency as a goal and not a means.

© 2008 Elsevier Ltd. All rights reserved.

1. Introduction

The idea of transparency is a societal mantra that draws support from a wide array of stakeholders and thereby alsointerests. Stakeholders can be defined as all conceivable actors who can affect or be affected by the activities of the company.From the company’s perspective, there is an interdependent relationship between itself and its stakeholders. As such theinterplay can be seen as a socially grounded relationship which involves responsibility and accountability. Top managementthus has a great interest in satisfying all the interested parties. Such notions are very much in line with the idea of transparencyaired in the social and environmental accounting (SEA) debate in the 1990s (cf. Gray, 2002), which sought to expand therealm of corporations’ reporting to ensure the disclosure of information to society concerning “the use of its resources andthe burdens/(benefits) it has been obliged to bear” (Gray, 1992, p. 415).

From this work, we can deduce two key points. First, transparency in terms of providing sufficient information for societyto be able to evaluate the activities of corporations must be directed towards society as a whole. Second, transparency ismobilized as a means and not a goal in itself.

∗ Corresponding author.E-mail address: chn@business.aau.dk (C. Nielsen).

1045-2354/$ – see front matter © 2008 Elsevier Ltd. All rights reserved.doi:10.1016/j.cpa.2008.09.007

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According to Van Riel (2000), transparency has for some corporations become a central corporate value, somethingwhich is not unproblematic, because transparency in essence is in the eyes of the beholder, i.e. the receiver and not thesender. As a consequence, Strathern (2000) argues that we must be conscious of multiple stakeholders with diverse interestswhen reflecting upon organisations’ deliberate striving for transparency. Because the concept of transparency is difficult toobjectify, it comprises a problem that companies, consultants and academics alike use this concept of transparent businessreporting in whichever way is appropriate for them, at the same time presenting transparency as an objective condition bywhich they live. Thus, we must be weary when corporations mobilize transparency as a goal. Here we must contemplatewhat their intentions are.

In the words of Llewellyn and Milne (2007, p. 806), accounting can be perceived as “the language of business” therebytaking “a specialised form of discourse, in part, because it relies, primarily, on numerical representations but also, andrelatedly, because it is codified”. The need for studying the social and institutional aspects of accounting has been accentuatedby “lacks of innocence” (Strathern, 2000) exemplified by the recent years’ major accounting scandals, such as Enron andParmalat. These “mishaps” have illustrated flaws of accounting, and the fragility of basing investment decisions solely onaccounting information.

It can be argued that the goal and moral duty of financial accounting is to achieve transparency. From an accountabilityperspective this will advance closeness and reduce inequality in society, while the same goal from an agency theory per-spective is to reduce information asymmetry. A broader representation of the company and its value creation logic, than thatwhich is conveyed through financial reporting, has been raised as a possible solution to seemingly increasing transparencyproblems. Among other things, it is argued that users need information that is able to represent an organisation’s identityand image (see e.g. Gioia et al., 2000) at the same time in an abbreviated and understandable fashion.

Moreover, there has been some discussion in recent years of whether or not both accounting standards and firms’ reportingto the business environment are appropriate in relation to transparency. This discussion is often coupled with the emergenceof the knowledge society and the new economy where intangible assets are gaining importance (cf. Stewart, 1997; Goldfinger,1997), and where intellectual capital, rather than physical capital, is often seen as the pivotal factor underlying value creation(Eustace, 2001; Blair and Wallman, 2001). Gelb (2002) accentuates this viewpoint, arguing that supplementary disclosure isan important communication medium for firms with significant levels of intangible assets.

Some of the most acknowledged work within the field of business reporting comes from the research conducted under theauspices of the Institute of Chartered Accountants of Scotland (ICAS) and the Institute of Chartered Accountants in Englandand Wales (ICAEW), the most notable reports being Beattie et al. (2004), Beattie and Pratt (2002), Fincham and Roslender(2003) and ICAEW (2004). Common to these reports is that they rely heavily on the classifications of the Jenkins report(AICPA, 1994). In this respect it can be argued that the Jenkins report may have at least earlier gained a dominant discursivestatus.

In contrast to this stands another more recent viewpoint in which only the most relevant and reliable information,seen from a specific sender namely management, should be disclosed. Among some of the most notable intellectual capitalreporting models that take their points of departure in this discourse is the Meritum guideline (Canibano et al., 2002) and theDanish guideline for intellectual capital statements (2003). In these models, designated by Fincham and Roslender (2003) as“narrative-based” reporting models, management’s perception of strategy, key management challenges and key performanceindicators form the basis of company disclosure.

This paper studies such intellectual capital and business reporting texts. The aim of this paper is, within the fields of intel-lectual capital and supplementary business reporting, to identify and discuss the discursive practices that mobilize the ideaof transparency. At this time it is also important to note, that although intellectual capital reporting is our point of departureand therefore our empirical focus, it is a part of a broader discourse that historical accounts may not be sufficient for decision-making, both within organisation and within financial markets studying organsations. Hence, intellectual capital reportingand related voluntary business reporting texts, such as those drawn upon in this paper, are to a large extent set within abroader sustainable development discourse. Our reasoning and thoughts on applying discourse analysis are described inSection 2. The following sections concern the mobilization of transparency in the field of intellectual capital reporting, anddescription of the initial discourse that views transparency as a generic information set and suggests that providing lotsof information is the best way of ensuring transparency. Next, we introduce a new discourse that views transparency as alimited-information set that is constructed according to management’s perception of appropriate information. The insightsgenerated through inspiration from critical discourse analysis (Dijk, 1993) are discussed in Section 6, where the discoursesare problematized. Mostly we problematize the management driven discourse, and its sender approach. In Section 7 wetry to explain possible future directions in relation to the transparency discourse and thereby also for intellectual capitalreporting.

2. Methodology

Research in some parts of social science has to an increasing extent focused on the production and consumption of textsin specific contexts (Phillips and Jørgensen, 2002; Dijk, 1993; Fairclough, 1992). Different analytical methods have beenintroduced under the umbrella of discourse analysis. A central argument in discourse analysis is that the only way subjectscan relate to the world is through words and text. It thus becomes central to study the way discourses are negotiated,contrasted and changed partly through spoken language, and partly through written texts. Discourse analysis is concerned

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with identifying patterns in the articulation of texts, and to further investigate and question the social consequences ofdifferent discursive meanings. Despite Ferguson’s (2007) critique of Fairclough’s critical discourse analysis for not takinginto consideration how analyzed texts are interpreted by the individuals who encounter them, and, furhtermore, also the“social-historical contexts of text production, transmission and reception”, we view the method as applicable to our case, inthe words of Gallhofer et al. (2006, p. 936), “the primary focus of analysis of discourse should be at the level, or levels, mostrelevant to the research”. As it is our intention here to study how transparency is “spoken” in the field of intellectual capitalreporting, we do not consider the effects of the texts themselves on the business community.

A discourse which has become dominant is approached as counterproductive, as on the one hand, it is unquestionedin a specific social field, and on the other hand, it may have huge consequences in the same field (Alvesson and Deetz,2000; Phillips and Jørgensen, 2002; Fairclough, 1992; Dijk, 1993). Examples of competing discourses could be medical andalternative treatment, or discourses of traditional administrative public management versus new public management. From adiscourse perspective, the discussion of alternative accounting procedures can thus be approached as a process of negotiatingcompeting discourses.

The perspective applied in this paper is embedded in inspiration from Fairclough (1997) and Dijk (1993). In the wordsof Dijk (1993 p. 252): “Critical Discourse Analysis should deal primarily with the discourse dimensions of power abuseand the injustice and inequality that result from it”. This specific perspective on discourse analysis is able to facilitate theunderstanding of how intellectual capital reporting gains or does not gain legitimacy in specific contexts. Over the last decade,published texts discussing supplementary reporting and intellectual capital accounts have become innumerable.

In our review, we did not systematically scrutinize, e.g. certain journals as would sometimes be the case in discourseanalysis. Rather, we have chosen to focus on texts that specifically suggest ways of creating visibility of that which is invisible.We looked for the idea of transparency contained in these texts by searching for the underlying reasoning as to how thelack of transparency problem was sought to be solved. More specifically we are concerned with the “reality” of intellectualcapital reporting practices in the construction of transparency.

As an illustration of the methodology, we can emphasize KPMG (2001), where, “increasing transparency is the foremostobjective of supplementary reporting practices”, and that “transparency is to be achieved by using managements performancemeasurements and data as a basis for supplementary reporting”. Thereby, our example illustrates that the perspective of theKPMG text is that (1) supplementary reporting is a means of achieving corporate transparency, and (2) as much informationas possible is better for decision-making. Another example of how transparency is mobilized is illustrated by Kalafut and Low(2001), who relate transparency directly to the disclosure of non-financial information and information on value creation(in a broad understanding).

The next section takes its point of departure in a general demand for transparency in business reporting. It furtherdemonstrates how discourses of generic and management chosen information, respectively, are articulated and confronted.

3. Transparency discourses in supplementary reporting

It has been emphasized how to promote greater transparency in companies’ communication with the business environ-ment and the capital markets (cf. AICPA, 1994), in this manner portraying the “real productivity of organisations” (Strathern,2000, p. 318). By “real productivity”, Strathern points towards the fact that accounting numbers are of historical nature anddo little good in describing the actual value creating activities of the company. Despite being mainly regarded as positive ofnature, transparency seems to be a complex, almost paradoxical, matter. According to Strathern (2000), transparency canbe viewed as a social mantra, shaped by expectations and strategies among central corporate actors (Christensen, 2002, p.166) such as top management, standard setters, consultants, academics, analysts and investors. Hence, transparency may beconstructed very differently remembering the multiple stakeholders involved.

It also becomes evident that the intellectual capital and voluntary business reporting texts, such as those drawn upon inthis paper in order to identify and discuss the discursive practices that mobilize the idea of transparency, to a large extentare set within the broader sustainable development discourse.

Reflecting on the problem of different, perhaps conflicting, interests, Strathern (2000) goes on to argue that “such anappeal [of transparency] to a benevolent or moral visibility is all too easily shown to have a tyrannous side”. In this manner,Strathern argues that we should be wary of organisations that claim to be transparent, or strive for transparency, as theirreporting may be embedded in different constructions of transparency than those of the reader.

Within the market-based accounting research, an abundance of well-developed empirical studies claim that a company’sdegree of transparency is connected with improved disclosure and can be observed by studying e.g. increased analyst interestin the firm (Barth et al., 2001), lower cost-of-capital (Sengupta, 1998; Botosan and Plumlee, 2002), and decreased bid-askspreads (Jensen et al., 2003). All such aspects can be closely linked to benefiting companies’ stock prices.

Some contributions (Eccles and Mavrinac, 1995; Adrem, 1999) suggest that an information gap is constructed betweenorganisations and the capital markets, and that traditional financial reporting, which primarily assesses the tangible assetsof an organisation, no longer forms a sufficient basis for uncovering the intrinsic value and the growth potential of anorganisation. It has been raised that ideally, intellectual capital and business reporting is a facilitator in the creation of sucha common understanding by presenting management’s description of future plans for value creation (Eccles et al., 2001,p. 49) in a transparent and straightforward manner (Canibano et al., 2002, p. 81), including comments on managementchallenges, initiatives, their relationships, and appropriate performance measures (Mouritsen et al., 2003a, p. 11). Through

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these statements it becomes clear that intellectual capital reporting is concerned with creating transparency of the internalefficiency and mobilization of intellectual capital in the value creation of the organisation.

However, this is not as straightforward as one might immediately perceive. The problem, of course, is that there mayexist differing perceptions of “straightforward manner” and “appropriate”. So while some authors suggest that achievingtransparency merely is a question of converging different perspectives on the organisation, for example Christensen, whoargues that “transparency [. . .] is a question of establishing a consensual system of meaning between different actors in thecorporate landscape” (2002, p. 167), different stakeholders and their backgrounds and contexts may induce that such ideasbecome counterproductive.

In a related field of study, namely that of SEA, transparency has long been related to multiple stakeholdergroups, andproblems relating to differing and opposing views of organisational goals and accountability. SEA, e.g. through the eyes ofGray (2006), adopts the stance that accountability must be related to society as a whole, and not merely to shareholders andother institutions in the business community.

In an almost anticapitalist-like view, Gray rather elegantly argues that: “Substantive social and environmental reportingand, especially, high quality reporting on (un)sustainability will demonstrate that modern international financial capitalismand the principle organs which support it are essentially designed to maximise environmental destruction and the erosionof any realistic notion of social justice” (Gray, 2006, 793). He goes on to state that new reporting models are too influencedby modern international financial capital “powerful and fundamental implications that this has for conventional financialreporting and for the superficial and cosmetic adjustments to that reporting through new models of organisational reporting”.Thus the SEA literature seems to consider transparency as a question of addressing accountability to society as a whole, andfurthermore warns us of the problems with not doing so. However, SEA models, such as GRI (2002) and Heemskerk et al.(2003) are not concerned with decision-usefulness. Rather they are proponents of disclosing as much as possible to as manystakeholders as possible.

According to Ward (2001), transparency with respect to corporate reporting is related to creating global standards – aregulation agenda based on a generic approach – but also to disclosing more information on value creation processes andthe future performance of the firm – hence also a management defined supply agenda. Therefore, a tendency is emerging tohighlight the importance of not just disclosing more and more information, but rather to provide users with the “appropriate”information. In line with Strathern (2000) problematization of transparency as a mechanism of tyranny based on conflictinginterests, the view of the concept of transparency that drives this study is that it is constructed in the interplay between thesuppliers of information, i.e. the report writers, and the users of information, i.e. the report readers. In the next sections,we discuss the two competing transparency discourses, namely of transparency as a generic reporting framework andtransparency as a management defined agenda.

4. The discourse of transparency as generic disclosure

Originating from the ideas of the Jenkins Committee (AICPA, 1994), the message of this discourse is that transparencycan be achieved by moving corporate reporting practices closer to management accounting practices, essentially basingcorporate reporting on management accounting type performance measurements and operating data. Much critique offinancial reporting, including the views of the Jenkins Committee, takes its point of departure in the lacking predictiveability of historically oriented information. Lack of information regarding growth prospects and technological feasibility(Lev, 2001) as well as intangibles in reporting practices are argued to be a major source of uncertainty for the investmentcommunity, which is concerned with assessing such risks and opportunities (Sveiby, 1997, p. 164). Thus, creating transparencyis perceived to be equivalent with a great supply of detailed and forward-looking information (cf. Holman, 2002) in a genericfashion.

A substantial part of the business reporting debate concerns the alignment of the information types reported internally andthe information disclosed externally to stakeholders (Roos et al., 1997). In this context, transparency is mobilized as a centraldiscursive factor by implying that the external reporting of performance measurement data is a prerequisite for creatingan understanding of the company (KPMG, 2001, p. 13) as these types of detailed information would facilitate investors andfinancial analysts, among others, with a better understanding of how the company creates value (Ansari and Euske, 1995, p.42). Thus, KPMG (2001) emphasizes that more and more information is a good thing and that somehow, external agents aregoing to be capable of applying all available data from the management team for their decisions.

Along these lines, Sveiby (1997, p. 196) argues that the application of non-financial indicators provides interesting newangles and are of great value to investors, while Lev (2001, p. 119) is more concerned with identifying important performanceindicators aimed at informing both managers and investors. It is a general consensus that by applying large quantitiesof new non-financial measures, e.g. sustainability measures (GRI, 2002, p. 68), companies can strengthen their externalcommunications, thereby achieving greater transparency.

Numerous contributions suggest that enhancing the transparency of corporate reporting can be achieved by disclosingan abundance of segment information (Eccles et al., 2001, p. 213), e.g. on market metrics (Ambler et al., 2001) or in the formof entity-level and process- or department-focused measures (KPMG, 2001, p. 8).

The idea of creating transparency through generic reporting frameworks seems closely related to reporting managementtype data externally. However, there seems to be a lack of idea of how to structure or select the information that shouldbe disclosed, and thus merely to report more, without any conception of the company’s specific situation and without

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any selection process, might become problematic. The suggestions in the discussion above seem to imply that achievingtransparency is a question of disclosing as much detailed information as possible.

5. The discourse of transparency as management driven disclosure

It has been raised that a dilemma exists between minimizing information asymmetry and the costs of disclosure (cf.Verrecchia, 1983), both from a cost/benefit perspective, but more importantly also with regard to the sensitivity of theinformation disclosed (Canibano et al., 2002, p. 80). According to Fincham and Roslender (2003, p. 76) a dilemma restsin the cognitive limitations of users of company reporting, implying that it is not sufficient simply to supply more andmore information, as this would entail an information overload even to sophisticated users (Plumlee, 2003). Thus disclosinginfinite amounts of detailed information might constitute a problem and thereby, in a paradoxical sense, become a hindranceto transparency.

The possible costs of excess disclosure, whether they be production costs, proprietry costs or understanding costs, are oftenaddressed. GRI (2002, p. 10) contemplates the probability of an information overload to users, suggesting the disclosure ofsegment reporting through sector supplements. Other suggestions for overcoming the information overload problem includesolely reporting such information via drill-down enabling technologies on the company’s website (Beattie and Pratt, 2001;Jones and Xiao, 2002).

A number of authors, e.g. including Kalafut and Low (2001), seem to perceive the term transparency as being equivalentto disclosing non-financial information and information relating to the company’s value creation (in a broad understanding).This is similar to the perspective aired in the Danish guideline for intellectual capital statements (Mouritsen et al., 2003a)where transparency is related to visualizing how the company works towards creating use value for the users of its productsand services. Unlike authors such as Kalafut and Low (2001), Mouritsen et al. (2003a) argue that the management anddisclosure of IC is a question of focussing managements efforts. Thus there is a concept of strategy and choice, which alsois present in the Meritum guideline (Canibano et al., 2002, 81), where transparency becomes a question of presenting thecompany’s intellectual capital in a straightforward manner.

It has been emphasized that as information reported by companies becomes more complex and company specific, externalstakeholders may find themselves unable to comprehend the full picture of value creation that these companies are tryingto make visible through their disclosures. Such problems are said to be partially overcome by providing more explanation ofsuch disclosures and by constructing measures that are comparable across time and across companies.

According to Ambler et al. (2001), quantitative measures should be supplemented by a commentary. They advocate forthe use of a proper mix of qualitative and quantitative data by combining text, numbers, and figures, much in the same wayas transparency is aimed at in the Danish guideline for intellectual capital statements (Mouritsen et al., 2003a). Likewise,in Eccles et al.’s (2001, p. 212) business reporting model, ‘ValueReporting’, management’s analysis becomes an explicitelement in shaping a transparent overview of the market. In summary, narrative explanations are presented as an importantcomplement to the new types of performance numbers disclosed (GRI, 2002, p. 81), as these may be difficult to comprehend,e.g. because of non-comparability.

Much research has pointed towards problems with unreliability of new reporting metrics, stating that the relevanceof such information is highly influenced by companies’ ability to disclose non-financial measures that are comparable,both across companies and over time. This issue of comparability is argued to be an important aspect in relation to thedecision-usefulness of such measures (Ambler et al., 2001), as reliability of un-accustomed measures is a challenge (KPMG,2001, p. 3). Thus the problematization of transparency is related to ensuring reliability. With regard to this topic, Lev(2001) and the Meritum guideline (Canibano et al., 2002, p. 82) argue that measures should be quantitative, standard-ized and financial, for the sake of comparability. However, reliability may refer to other mechanisms, such as experience inusing specific pieces of information for valuation purposes and having the time to relate complex measures to an overallcontext.

According to Mouritsen et al. (2003b), a time-series of identical performance measures is a necessity for a meaningfulanalysis of non-financial information. In much the same manner, GRI (2002, p. 29) emphasizes that maintaining consistencyin both the boundary and the scope of reports is a central notion in ensuring comparability, and thus also transparency. Severalbusiness reporting models acknowledge that measures must be comparable both throughout time and across companies,as the value of information is said to grow when it is in the context of a historical trend line and comparable to competitors(Eccles et al., 2001, p. 205).

The disclosure of key success factors forms a central argument in relation to transparency in Roos et al.’s (1997) businessreporting model, the IC-index, and likewise in the Meritum guideline (Canibano et al., 2002). Identifying critical successfactors is constructed as encapturing a link to measuring what matters. Disclosing information on critical success factorsrefers to illuminating why and how performance measures are relevant (KPMG, 2001), because, according to Eccles et al.(2001, p. 204), merely reporting a lot of information is insufficient, it is the reporting of the information that managementdeems most important which counts.

Thus, a predominant element of the transparency discourse, when related to critical success factors, is the necessity oflinking disclosure of e.g. performance measures to strategy (KPMG, 2001, p. 11; Canibano et al., 2002, p. 68). Information,such as critical success factors, is argued to give a more complete picture of the company’s long-term prospects, as its licenseto operate is illustrated (GRI, 2002, p. 4).

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A discourse where transparency is not an outcome of supplying full information seems to emerge, as disclosing allinformation at hand has been argued to induce problems of understanding and costs for the reader. In opposition, it isargued that transparency should be achieved through disclosing information that is comparable and somehow connectedwith the strategic intent of the company. In other words, transparency can also be understood as disclosing the informationwhich management deems the most important.

6. Discussion of transparency in intellectual capital reporting

In this study we introduced the notions of generically driven disclosure models and management driven disclosuremodels. The intention was to emphasize companies’, standard-setting bodies’, and researchers’ critical awareness of thediscursive elements that comprise the struggle to develop corporate reporting in general and intellectual capital report-ing more specifically. In order to structure the following discussion of transparency in the intellectual capital reportingdebate, we therefore introduce the notion of a communication model, where a sender sends a message to a receiver (cf.Parker et al., 1989). This simplistic sender-receiver idea is interesting to contemplate, because, while much focus in thebusiness reporting debate has been on meeting users needs, and furthermore, that transparency may entail disclosing morethan merely accounting numbers, not much attention has been paid to the sender, or the attributes of the message. Thus,we relate the substance of our discussion according to these three categories, in turn illustrating the key differences inTable 1.

Among the key differences between the two discourses is that the management driven perspectives seem to have thenotion of a sender of information, namely the given company’s management. For example, the need for more forward-lookinginformation was intimately connected with a focus on recent changes in the business environment. The reporting of criticalsuccess factors and value drivers, i.e. value creation flows, had a strong link to the disclosing of relevant information, andthus also to management’s choice of information. Such value drivers could e.g. be in the shape of market metrics (Ambler etal., 2001) or core competencies (Canibano et al., 2002, p. 68).

In this sense, disclosure of e.g. value drivers is an attempt to explicitly link the companies’ managerial efforts with thespecific competitive contexts in which they operate, by recognizing the importance of including considerations on businessconcept and strategy in the business reporting process (Roos et al., 1997). As suggested by Strathern (2000), we might questionthe agenda of the business reporting producers and ask whether senders could in fact be interested in manipulating withthe picture of the company’s values.

Transparency is not merely a question of supplying the most appropriate information about the company through theeyes of management. An important feature of this perspective on transparency is that it introduces the idea of a specificsender. However, from this perspective it is left in the hands of the producers of business reporting, e.g. accountants andsenior managers, to choose selectively “relevant” information, and the users of this information may to some extent becomevictims of pre-selected published information. Perhaps transparency has been, if not pacified, then at least cornered in theparadox of the tyranny of transparency?

Table 1 thus depicts the differences between the two competing discourses according to a simplistic sender–receivermodel of communication such as the one used by Parker et al., 1989. As such, our review indicates that the communicativeorientation of the two discourses differ in that the generic disclosure perspective lacks an implication of sender, while themanagement driven perspective clearly denotes company management as the sender of information. The critical readerwill of course argue that any kind of corporate disclosure per definition is management driven, as is the case with e.g.SEA disclosures discussed in the introduction (cf. Gray, 2006). However, the important aspect here is that in our second“discourse”, management delivers a structure to the reader, e.g. a strategic narrative, whereby it is possible to follow thelogic of action taken and in doing so, take the stance that all stakeholders have a similar background and context to that ofthe management team itself.

What we find most problematic concerning the sender perspective, however, is that the management driven perspectiveperceives transparency as a goal in itself, and thereby a concept which is objectifiable. In the generic approach, models withthis point of departure were also present, for instance the Jenkins report (AICPA, 1994) and GRI (2002), but the “means”perspective was also present, for instance KPMG (2001) who argue that information relating to value creation processes is aprerequisite of transparency. It is somewhat surprising that GRI (2002) talks of transparency as a goal, having in mind that

Table 1Constructions of discursive transparency.

Substance Generic discourse Management driven discourse

Sender Communicative orientation No focus Sender focusSender Objective of transparency Both a means and a goal are present A goalMessage Measurement qualities Neutral representation Neutral representationMessage Complexity No problem market solution Big problem- numbers and wordsMessage Information quantity Increasing mantra: more is better Selective mantra: critical success factors

Risk: information overload Risk: “Political sensemaking”Receiver Consideration of the consumption

of the IC informationNo focus, wide stakeholder base No focus, wide stakeholder base

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the SEA literature on which these guidelines seemingly are based consequently states that transparency should be a meansand not a goal in itself.

From the supplementary reporting literature we find three main messages concerning the substance of intellectual capitalreporting. The first message concerns the problems of measurement quality with regard to the information supplied. Bothdiscourses mobilize a conception of neutral representation as a prerequisite for disclosing information. In a recent criticism,Baker (2007) argues that even from a financial accounting standard-setters perspective, the meaning of the terms “economicreality” and “neutral representation” do not represent notions of objectivity.

The second message concerns problems of rising complexity of the supplementary information on companies’ intellectualcapital that is reported. Here there are differing views. Within the generic discourse, rising complexity does not comprise anyproblem. In essence, it is left to the market to regulate the disclosure amounts and as such this perspective takes a similarstance to the calculative abilities of the information receivers as other disclosure theories in the normative paradigm. Inopposition to this is a body of literature that takes its point of departure in a perspective of the information receiver as aboundedly rational being acting from a logic of appropriateness rather than a logic of consequentiality. In turn, the mixtureof numbers, non-financial measures, words and figures that make up intellectual capital reports, are problematic from amanagement driven discourse. The problem of complex information is sought to be solved by structuring the disclosuresaround the strategic imperatives of the company.

In close relation to the above message, the third message relates to the quantity of information sent to the receiver. Inthe generic driven discourse, more information is better. However, the risk of such a perspective is information overloadto the user, while in the management driven discourse there is a risk of “political sensemaking”. With inspiration fromcritical discourse approaches, we argue that the latter risk is more crucial than the first as it may be experienced as themost oppressive. Although taken for granted discourses should in general be questioned hiding information might be moreproblematic than the opposite.

Finally, in relation to the receiver, none of the discourse identified in the intellectual capital debate seem to consider theconsumption of the IC information, nor the type of receiver that is addressed. We find this – if not alarming – then at leastan interesting avenue for further research.

7. Concluding remarks

Critical discourse analysis is often concerned with addressing negligence towards the oppressive element of a discourse.The aim of this paper was to uncover the version of “reality” being produced in the intellectual capital reporting debate, andthe arguments embedded in two discourses, which in different ways were used in favor of transparency.

Transparency can be perceived as an outcome of internal and external stakeholders’, i.e. company managements andcompany stakeholders’, agreements on interpretations of the company. Hence it can be argued that transparency, as ameans and not an end, needs a voice and an ear. Transparency is therefore not something out there, but rather some-thing that needs to be constructed in an interplay, and quite importantly, it is a means of achieving understanding andnot a goal (or corporate value) in itself. Christensen (2002) advocates for further studies on how transparency is producedcollectively and institutionalised in the current business environment, e.g. incorporating the expectations among relevantstakeholders to which the strategy of transparency claims to be an adaptive response (Fombrun and Rindova, 2000, p.94).

The two discourses identified had some interesting differences. One discourse highlighted the need for disclosing as muchinformation to stakeholders as possible, but seemed to be in the process of being substituted by a second discourse, whichemphasized intellectual capital reporting as what is seen from the perspective of management, and thereby disclosing the“right” information, and only that. The argument for the latter discourse is that it will make intellectual capital reporting moretransparent, because of users’ bounded rationality and other constraints such as time. This, however, has the implicationthat users of intellectual capital reporting may become victims of management’s selected “right” information, by Strathern(2000) designated as the “tyranny of transparency”.

A recent study of Investor Relations practices in a Danish context (Nielsen et al., 2006) indicates that transparency mustbe understood as a process encompassing many different information channels and necessarily also following the companyover a longer period of time. This seems to indicate that transparency is not something which is immediate to the externalstakeholder, i.e. the receiver of the information, but rather something which is constructed over time. This issue has not beenaddressed in the reviewed literature, and as such it may constitute an interesting avenue for further study into corporatedisclosure and transparency.

Acknowledgement

The authors wish to thank Jan Mouritsen, Per Nikolaj Bukh and the participants of the seminar series in IntellectualCapital and Accounting at Mälardalen University and Uppsala University, Sweden, for their helpful and constructive com-ments in relation to an earlier version of this paper. Finally, we wish to thank Birgitte Højklint for her very useful editorialassistance.

854 C. Nielsen, M.T. Madsen / Critical Perspectives on Accounting 20 (2009) 847–854

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