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.

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.

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.

Involuntary disclosure of intellectual capital: is it relevant?

2017 ◽  
Vol 18 (1) ◽  
pp. 29-44 ◽  
Author(s):  
John Dumay ◽  
James Guthrie
Keyword(s):  
Intellectual Capital ◽  
Mass Communication ◽  
Annual Reports ◽  
Future Research ◽  
Content Type ◽  
Social Good ◽  
Key Issues ◽  
The Impact ◽  
A Company ◽  
Share Value

Purpose The purpose of this paper is to present an exploratory essay evaluating whether involuntary intellectual capital disclosure (ICD) is value relevant to stakeholders. The authors define involuntary disclosure as “what external stakeholders and stakeseekers disclose about a company”. This essay is timely because it lays the foundations for future ICD research that departs from traditional analyses of corporate reports, especially annual reports. Design/methodology/approach The paper provides a critical reflection on current and future developments in ICD research. The normative arguments rely on the experience and expertise along with examples from the ICD literature and contemporary business media to critique existing ICD research and practice and to offer new ways forward for future research. Findings In highlighting the limitations of the traditional ICD literature, the authors provide a foundation from which researchers should contemplate a powerful new force in ICD brought about by the rapid transformation in technologies and forces of mass communication. The authors introduce the concept of “involuntary disclosure”, and highlight several key issues that intellectual capital (IC) researchers should consider if they want their academic endeavours to contribute not only to practice, but to a wider environmental and social good. Practical implications Involuntary disclosures produced by stakeholders and stakeseekers introduce opportunities and threats to organisations, bringing new risks that impact share value and reputations. How well organisation manage these risks, and the impact inside and outside organisational boundaries, to provide economic, environmental and social value, should provide ample fuel for future transformational IC research. Originality/value The most value relevant disclosures are not what an organisation discloses or reports about itself, but rather what stakeholders and stakeseekers communicate. However, how reliable are involuntary disclosures and how can stakeholders and organisations verify IC disclosures coming from outside the organisation? If involuntary IC disclosures are value relevant, how might organisations seek to influence and manage them to serve their ends?

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.

Brazilian Natura & Co: creating cosmetic powerhouse. Empirical evidence of competence-based synergies in M&A processes

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Andrejs čirjevskis
Keyword(s):  
Value Added ◽  
Annual Reports ◽  
The Arctic ◽  
Future Research ◽  
Content Type ◽  
Acquisition Process ◽  
Cultural Fit ◽  
Governance Systems ◽  
Market Value Added ◽  
The Impact

PurposeThis paper aims to operationalize and to test the ARCTIC (A – Advantage, R – Relatedness, C – Complexity of Competence, T – Time of Integration, I – Implementation Plan, C – Cultural Fit) framework to assess the prerequisites of competence-based synergy in the acquisition process. The current research provides new analyses of recent acquisitions in the global beauty industry where the ARCTIC framework was satisfied and where the ARCTIC model was NOT satisfied by decisive factors to get the acquisition's synergies. It allows readers to contrast two case studies and grasp how the framework works in greater detail.Design/methodology/approachThe current research relies on an extensive archival search that included financial statements, annual reports, internal documents, industry publications and CEO statements to get at a micro-level understanding. This boosts research data and the operationalization of the ARCTIC framework.FindingsThe research identified four steps for investigating whether core competence transfer in an acquisition process would be a source of competence-based synergies. The incorporation of real options into the synergy valuation measures market value-added arising from M&A deals.Originality/valueThe current paper contributes to theoretical and practical issues of global M&As as part of the existing literature of international business and strategic management. The impact on reciprocal synergies of agency problems, external interaction between CEOs in M&A deals, corporate governance systems and an executive compensation theory are promising areas of future research.

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.

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.

Intellectual Capital, Innovation and Firm Performance of Pharmaceuticals: A Study of the London Stock Exchange

2017 ◽  
Vol 16 (02) ◽  
pp. 1750017 ◽  
Author(s):  
Shahid Amin ◽  
Shoaib Aslam
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Structural Equation ◽  
Stock Exchange ◽  
Value Added ◽  
Secondary Data ◽  
Sem Analysis ◽  
Annual Reports ◽  
London Stock Exchange ◽  
The Impact

The objective of this study is to explore the empirical structural links among intellectual capital (IC), innovation and firm’s financial performance, furthermore, the impact of IC and innovation on firm’s financial performance has also been measured. Value added intellectual coefficient model (VAIC) has been used for the measurement of IC. Innovation is measured through research and development (R&D), products development and products in pipeline, whereas, financial performance is measured through traditional financial measures such as return on assets (ROA), return on equity (ROE), earnings per share (EPS), assets turnover ratio (ATO) and market-to-book ratio (MB). The study was based on secondary data, and it has been collected from the published annual reports of listed pharmaceutical firms in London Stock Exchange. The research was carried for the three year period of 2012–2014 and our sample consists of 207 firm-year observations. Structural Equation Modelling (SEM) technique is used to address cause–effect relationships among endogenous and exogenous constructs. Empirical results of SEM analysis support that IC and its components have positive and significant impact on innovation and firms’ financial performance. Moreover, innovation also has significant impact on firms’ financial performance. The study is valuable for the manager, decision makers and policy makers to recognise the value of IC and its philosophy to obtain and sustain competitive advantage through innovation.

The impact of intellectual capital on firm performance: a study of Indian firms listed in COSPI

2018 ◽  
Vol 19 (5) ◽  
pp. 935-964 ◽  
Author(s):  
Neha Smriti ◽  
Niladri Das
Keyword(s):  
Firm Performance ◽  
Intellectual Capital ◽  
Value Creation ◽  
Generalized Method Of Moments ◽  
Value Added ◽  
Secondary Data ◽  
Share Price ◽  
Content Type ◽  
Listed Firms ◽  
The Impact

Purpose The purpose of this paper is to examine the effect of intellectual capital (IC) on financial performance (FP) for Indian companies listed on the Centre for Monitoring Indian Economy Overall Share Price Index (COSPI). Design/methodology/approach Hypotheses were developed according to theories and literature review. Secondary data were collected from Indian companies listed on the COSPI between 2001 and 2016, and the value-added intellectual coefficient (VAIC) of Pulic (2000) was used to measure IC and its components. A dynamic system generalized method of moments (SGMM) estimator was employed to identify the variables that significantly contribute to firm performance. Findings Indian listed firms appear to be performing well and efficiently utilizing their IC. Overall, human capital had a major impact on firm productivity during the study period. Furthermore, the empirical analysis showed that structural capital efficiency and capital employed efficiency were equally important contributors to firm’s sales growth and market value. The growing importance of the contribution of IC to value creation was consistently reflected in the FP of these Indian companies. Practical implications This study has robust theoretical grounds and employs a validated methodology. The present study extends knowledge of IC among academicians and managers and highlights its contribution to value creation. The findings may help stakeholders and policymakers in developing countries properly reallocate intellectual resources. Originality/value This study is the first study to evaluate IC and its relationship with traditional measures of firm performance among Indian listed firms using dynamic SGMM and VAIC models.

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