Value-added intellectual capital and financial performance: evidence from Mauritian companies

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Reena Bhattu-Babajee ◽  
Boopen Seetanah
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Positive Impact ◽  
Value Added ◽  
Dynamic Panel Data ◽  
Dynamic Panel ◽  
Content Type ◽  
Data Framework ◽  
Long Run ◽  
The Impact

PurposeThe purpose of this paper is to empirically assess the impact of value-added intellectual capital (VAIC) on the financial performance (FP) of companies in Mauritius.Design/methodology/approachThe research uses a dynamic panel vector error correction model (PVECM) which simultaneously allows for endogeneity and causality issues among the variables used.FindingsThe results show that VAIC enhances corporate FP, with a reported lower effect in the short run as compared to the long run. Other important determinants of firm’s performance are asset turnover, capital turnover and firm’s size. Leverage, on the other hand, is observed to be performance reducing in nature. FP of the companies is also a significant determinant of VAIC, implying reverse causal effects exist between the two variables of interest, namely, VAIC and FP.Research limitations/implicationsThe study can be enhanced by doing an industry-specific comparison of the impact of VAIC on FP for more insights.Practical implicationsIt is recommended that managers pay more attention to the role of firms’ stock of tangible and intangible assets, as this has a positive impact on firms’ FP. Also, the results may help to increase awareness of the importance of effective intellectual capital (IC) management within an organization. More so, as demonstrated by Ståhle et al. (2011), VAIC indicates the efficiency of the company’s labor and capital investments within firms in Mauritius. This study may, therefore, enable Mauritian firms to measure their IC efficiency and develop policies to promote and improve upon their intellectual potential to enhance firm’s performance.Originality/valueThe main theoretical contribution of this paper relates to the assessment and conceptualization of the bi-directional relationship between VAIC and FP. It confirmed that there are self-reinforcing feedback effects between VAIC and FP. Methodologically speaking, this paper investigates the VAIC–FP nexus in a dynamic setting using a dynamic panel data framework, namely, a PVECM which also allows for additional insights into the short- and long-run effects.

scholarly journals The association between intellectual capital and financial performance in the Islamic banking industry

2019 ◽  
Vol 13 (1) ◽  
pp. 75-93 ◽  
Author(s):  
A.A. Ousama ◽  
Helmi Hammami ◽  
Mustafa Abdulkarim
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Positive Impact ◽  
Value Added ◽  
Annual Reports ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Gcc Countries ◽  
The Impact

Purpose The purpose of this study is to empirically investigate the impact of intellectual capital (IC) on the financial performance of Islamic banks operating in the Gulf Cooperation Council (GCC) countries. Design/methodology/approach The study measures IC by the value added intellectual coefficient model. A regression analysis was used to assess the impact of IC on financial performance. The research sample consisted of Islamic banks operating in the GCC countries during the years 2011, 2012 and 2013. Data originated from the annual reports of Islamic banks. Findings The results support the thesis that IC has a positive impact on the financial performance of Islamic banks. Even though the average IC is lower than that reported in other studies, the positive effect on financial performance is obvious. The findings also show that human capital (HC) is higher than capital employed (CE) and structural capital (SC). The study reveals that SC has an insignificant impact on the financial performance of the Islamic banks compared to CE and HC. Practical implications The findings provide empirical evidence that IC affects the Islamic banks’ financial performance. It helps Islamic banks in the GCC countries to understand how to use their IC efficiently, especially SC as it is yet to be used efficiently. Also, the findings benefit the relevant authorities (e.g. legislators and central banks) who could use them to emphasise strategic policy reforms whenever required. Originality/value The current research adds to the empirical studies in the GCC countries as it views the region as a collective as opposed to individual countries. It also extends the IC and performance measurement literature of Islamic banks in the GCC countries. Moreover, the current study enriches the limited literature on IC in the context of Islamic banking.

Influence of Intellectual Capital on Performance

2021 ◽  
Vol 12 (2) ◽  
pp. 53-71
Author(s):  
Kanishka Gupta ◽  
T. V. Raman
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Value Added ◽  
Dynamic Panel Data ◽  
Return On Assets ◽  
Time Period ◽  
Panel Data Regression ◽  
Data Regression ◽  
Developed World ◽  
The Impact

Intellectual capital (IC) has gained recognition in enhancing the firms' value and gain a competitive advantage in the developed world. The present study examines the impact of IC on firms' financial performance. The study takes 48 companies for the time period of 10 years (2009-2018). The paper has used modified Pulic's value added intellectual coefficient (VAIC) as a proxy to measure IC and return on assets (ROA) to measure firms' financial performance. Granger causality between all the components of IC and ROA has been tested using Dumitrescu-Hurlin test. To analyse the impact, correlation and dynamic panel data regression technique has been applied. The result indicates that overall intellectual capital, human capital, relational capital, process capital, and financial capital have a significant impact on financial performance. On the other hand, innovation capital has no significant relationship with firms' financial performance. The results are helpful for managers, policymakers, government, and investors so that they can properly manage and regulate the IC of their organization.

scholarly journals Empirically examining the impact of corporate social responsibility on financial performance: evidence from Indian steel industry

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nripinder Kaur ◽  
Vikramjit Singh
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Financial Performance ◽  
Steel Industry ◽  
Positive Impact ◽  
Value Added ◽  
Annual Reports ◽  
Content Type ◽  
Corporate Social ◽  
The Impact

PurposeThis paper aims to examine the impact of corporate social responsibility (CSR) on financial performance (FP) of Indian steel industry in terms of value-added (VAM), profitability (PM), market (MM) and growth measures (GM).Design/methodology/approachIt is an empirical study using secondary data of 40 companies for 14 years collected from CSR/annual reports/official websites of the companies and Prowess database. The panel regression analysis, MANOVA and univariate ANOVA have been conducted to examine the impact of CSR on FP.FindingsThe result indicates a positive impact of CSR on FP in terms of VAM, PM and GM, thereby indicating that more investments in CSR will generate wealth for shareholders, enhance profitability and sales. Moreover, this study shows no noticeable relationship between CSR and MM.Social implicationsThis study contributes to the literature on the CSR–FP relationship and also has implications for managers, investors and other stakeholders. Companies with higher CSR rating create a brand image, attract proficient employees, get greater profit, loyal customers and have less possibility of bribery and corruption. This study may result in being influential to companies confined not only to this sector but also reaching to the others, thus inspiring them to contribute their share of profit for the welfare of society.Originality/valueTo the best of the authors' knowledge, it is the first comprehensive study to examine the impact of CSR on FP of Indian steel industry by considering four dimensions for measuring FP. It provides evidence about the relationship between CSR and FP.

Intellectual capital and financial performance in the Serbian ICT industry

2016 ◽  
Vol 17 (2) ◽  
pp. 373-396 ◽  
Author(s):  
Vladimir Dženopoljac ◽  
Stevo Janoševic ◽  
Nick Bontis
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Value Creation ◽  
Value Added ◽  
Physical Capital ◽  
Content Type ◽  
Main Research ◽  
Ict Industry ◽  
The Impact ◽  
Ict Companies

Purpose – The purpose of this paper is to examine whether intellectual capital (IC) creates value in the Serbian information communication technology (ICT) sector. More specifically, it examines the degree to which IC and its key components affect the financial performance of selected ICT companies compared to effects on physical and financial capital. Design/methodology/approach – The analysis included 13,989 Serbian ICT companies during 2009-2013. Value-added intellectual coefficient (VAIC) was used to measure the level of IC contribution to value creation. Measures of financial performance used in the study were return on equity, return on assets, return on invested capital, profitability, and asset turnover. Findings – Results indicate that, when using firm size and leverage as control variables, only capital-employed efficiency has significant effect on financial performance. Finally, the research confirms that there were no significant differences in financial performance among different ICT subsectors. Research limitations/implications – Main research limitation is related to the disadvantages of VAIC as the measure of IC’s contribution to value creation. Practical implications – Owners and managers of Serbian ICT companies must recognize the importance of managing both the physical capital and the intangible resources embedded in their employees and processes. Originality/value – This is the first paper to examine comprehensively the impact of IC on financial performance in the ICT sector in a transitional economy. This study differs from prior studies in that the authors analyzed every company that operated in Serbian ICT sector.

Intellectual capital efficiency and bank’s performance

2019 ◽  
Vol 31 (4) ◽  
pp. 672-694 ◽  
Author(s):  
Amina Buallay ◽  
Richard Cummings ◽  
Allam Hamdan
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Positive Relationship ◽  
Market Performance ◽  
Value Added ◽  
High Tech ◽  
Islamic Banks ◽  
Content Type ◽  
Conventional Banks ◽  
The Impact

Purpose Intellectual capital (IC) plays a pivotal role in the high-tech and knowledge-based economic sectors. With the emergence of FinTech, which, with respect to the banking sector, is merging high-tech with the k-economy, there is an emerging need to highlight the importance and understand the dynamics of bank IC. With respect to Gulf Cooperation Council (GCC) economies, where FinTech has become de rigueur, banking is bifurcated into Islamic and banking sectors. Through comparative empirical analysis, the purpose of this paper is to examine IC efficiency in Islamic and conventional banks with a view to elucidating the impact of IC, in aggregate and decomposed into its components, on an operational, financial and market performance of Islamic banks juxtaposed with conventional banks. Design/methodology/approach Using data collected from 59 banks for five years (2012-2016) involving 295 observations, an independent variable derived from the modified value added IC (MVAIC) components are regressed against dependent bank performance indicator variables [Return on Assets (ROA), Return on Equity (ROE) and Tobin’s Q (TQ)]. Two types of control variables complete the regression analysis in this study: bank-specific and macroeconomic. Findings The findings elicited from the empirical results demonstrate that there is positive relationship between IC efficiency and financial performance (ROE) and market performance (TQ) in Islamic banks. In conventional banks, however, there is a positive relationship between IC and operational performance (ROE) and financial performance (ROE). Originality/value The model in this paper presents a valuable analytical framework for exploring IC efficiency as a driver of performance in dual-sector banking economies characterized by co-existence of Islamic and conventional financial institutions. In addition, this paper highlights bank management lacunae manifesting in terms of the weak nexus between: IC and asset efficiency (ROA) in Islamic banks and IC and market value (TQ) in conventional banks.

scholarly journals Determinants of financial performance of Islamic banks: an intellectual capital perspective

2017 ◽  
Vol 8 (2) ◽  
pp. 130-142 ◽  
Author(s):  
Tasawar Nawaz ◽  
Roszaini Haniffa
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Positive Relationship ◽  
Value Added ◽  
Annual Reports ◽  
Content Type ◽  
Significant Positive Relationship ◽  
Accounting Performance ◽  
Capital Efficiency ◽  
The Impact

Purpose The purpose of this paper is to empirically examine the effect of intangible resources, i.e. intellectual capital (IC) on financial performance of 64 Islamic financial institutions (IFIs) operating in 18 different countries for the period 2007-2011, while controlling for firm-specific variables, namely, bank size, level of risk, listing status, and firm complexity. Design/methodology/approach The required data to calculate different constituents of IC are derived from Bankscope database. Value Added Intellectual Coefficient (VAIC) methodology devised by Pulic is used to determine the impact of IC on financial performance of IFIs. Findings Results indicate a significant positive relationship between VAIC and accounting performance based on return on assets (ROA). The results further indicate a significant positive relationship between accounting performance and capital employed efficiency (CEE) and human capital efficiency (HCE), but no significant relationship with regards to structural capital efficiency. Overall, the results suggest that value creation capability of IFIs is highly influenced by HCE and CEE. Research limitations/implications The main limitation of the present study lies in its methodological tool, the VAIC methodology, which has been criticized by some researchers as not really measuring IC. Despite the inherent limitation of the VAIC methodology which relies on secondary data published in annual reports, it is still considered by some researchers as one of the best available tool to measure firms’ IC in the absence of access to detailed internal information on IC. Practical implications The findings may serve as a useful input for Islamic bankers in managing their investments in IC within their institutions. Originality/value The main contribution of this paper is to use a previously little-studied area, Islamic banking and finance, to identify the effect of intellectual capital on performance.

scholarly journals Real exchange rate undervaluation and sectoral growth in South Africa

2018 ◽  
Vol 9 (4) ◽  
pp. 462-476
Author(s):  
Brian Tavonga Mazorodze ◽  
Dev D. Tewari
Keyword(s):  
South Africa ◽  
Exchange Rate ◽  
Panel Data ◽  
Real Exchange Rate ◽  
Positive Impact ◽  
Dynamic Panel Data ◽  
Dynamic Panel ◽  
Content Type ◽  
Sectoral Growth ◽  
The Impact

PurposeThe purpose of this paper is to establish the empirical link between real exchange rate (RER) undervaluation and sectoral growth in South Africa between 1984 and 2014.Design/methodology/approachThe study employs a dynamic panel data approach estimated by the system generalised method of moments technique in a bid to control for endogeneity.FindingsThe authors find a significant positive impact of undervaluation on sectoral growth which increases with capital accumulation. Also, the authors confirm that undervaluation promotes sectoral growth up to a point where further increases in undervaluation retards growth.Practical implicationsThe results confirm the importance of policies that keep the domestic currency weaker to foster sectoral growth.Originality/valueThe originality of this paper lies in establishing the impact of exchange rate undervaluation on growth at a sector level in the context of South Africa using a dynamic panel data approach.

Impact of intellectual capital on financial performance: evidence from the Bangladeshi textile sector

2018 ◽  
Vol 14 (4) ◽  
pp. 429-454 ◽  
Author(s):  
Leena Afroz Mostofa Chowdhury ◽  
Tarek Rana ◽  
Mahmuda Akter ◽  
Mahfuzul Hoque
Keyword(s):  
Financial Performance ◽  
Performance Management ◽  
Emerging Economies ◽  
Intellectual Capital ◽  
Textile Industry ◽  
Value Added ◽  
Annual Reports ◽  
Future Research ◽  
Content Type ◽  
The Impact

Purpose The purpose of this paper is to investigate the influence of intellectual capital (IC) on financial performance and, in turn, to provide insights into its impact on emerging economies. Design/methodology/approach Data were collected from 34 textile firms in Bangladesh between 2013 and 2017. The IC efficiency, through value-added intellectual coefficient (VAIC) model, and its impact on financial performance, through return on assets (ROA), return on equity and asset turnover (ATO), was examined using descriptive statistics and multiple regression techniques. The analysis is based on secondary data obtained from annual reports. Findings The results indicate the impact of VAIC components on financial performance and also demonstrate diverse relationships with changes in financial indicators. The VAIC components significantly influenced productivity outcomes, with tangible capital playing a major role in both productivity and profitability. Moreover, it was found that structural capital had a considerable effect on ATO and ROA with human capital indicating an insignificant impact on all financial performance indicators. Research limitations/implications The research outcome is specific to the textile industry in emerging economies. The study may guide future research on IC performance in textile firms and cross-industry comparisons. Practical implications Managers, firm owners and regulators need to align IC to performance management to sustain the competitive advantage in globalised competitive settings. Originality/value The study provides an empirical evidence and extends knowledge of IC utilisation for enhancing the financial performance of the textile firms in emerging economies.

A European empirical study of the relationship between firms’ intellectual capital, financial performance and market value

2017 ◽  
Vol 18 (4) ◽  
pp. 771-788 ◽  
Author(s):  
Filipe Sardo ◽  
Zélia Serrasqueiro
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Western Europe ◽  
Market Value ◽  
Content Type ◽  
Large Sample ◽  
Explanatory Variables ◽  
Long Run ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to analyze the relationship between firms’ intellectual capital (IC), financial performance (FP) and market value (MV) as well as the relationship between ownership concentrations on IC performance. Design/methodology/approach A large sample of non-financial listed firms belonging to 14 countries in Western Europe, for the period between 2004 and 2015, was investigated using the GMM system (1998) dynamic estimator and the effect of lagged explanatory variables on firm’s FP and MV. Findings The results reveal that IC is an important resource for firms’ value creation. Human capital is found to be a key factor of firms’ wealth. Results show that capital employed efficiency positively impacts on firms’ FP in the short run. The impact of IC components on firms’ MV may not be immediate. The structural capital positively affects firms’ FP in the long run. Also, the results reveal that ownership concentration and owners’ management involvement constrain firms’ IC performance. Originality/value The current study contributes to IC research by exploring a large sample of firms across countries in Western Europe using econometric modeling. Considering that the effect of IC on firms’ FP needs time to be realized, thus to be measured, the effect of lagged explanatory variables on performance was tested, using dynamic panel estimators, specifically the GMM system (1998) dynamic estimator.

Intellectual capital and technical efficiency of banks in an emerging market: a slack-based measure

2020 ◽  
Vol 47 (7) ◽  
pp. 1711-1732 ◽  
Author(s):  
King Carl Tornam Duho
Keyword(s):  
Technical Efficiency ◽  
Intellectual Capital ◽  
Economies Of Scale ◽  
Positive Impact ◽  
Emerging Market ◽  
Value Added ◽  
Content Type ◽  
Sigma Convergence ◽  
The Impact ◽  
Beta Convergence

PurposeThis paper investigates the impact of intellectual capital and its components on slack-based technical efficiency (SBM-TE) of banks.Design/methodology/approachData envelopment analysis is used to compute SBM-TE scores and the Value-Added Intellectual Coefficient (VAIC™) model is used to measure intellectual capital. An unbalanced panel of 32 banks that operated from 2000 to 2017 has been used.FindingsOverall, the efficiency scores are averaged at 79%, suggesting that an inefficient bank needs to enhance technical efficiency by 21% to be at par with the best performing banks. Beta-convergence and sigma-convergence exist among banks with faster speed evident among listed and local banks. Intellectual capital has a positive impact on SBM-TE and human capital is the main driver of technical efficiency among banks. This result is specifically evident among non-listed banks and foreign banks. Economies of scale property are also evident among the banks. Competition and asset tangibility inhibit technical efficiency among banks.Practical implicationsBanks are advised to invest in value-adding emerging technologies and their employees so as to enhance their efficiency. The study offers insights for policymakers, practitioners and researchers in emerging markets.Originality/valueThe study is premier in employing the SBM-TE to explain the intellectual capital and efficiency nexus, as well as, testing for both beta-convergence and sigma-convergence.

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