Risk-adjusted banks' resource-utilization and investment efficiencies: does intellectual capital matter?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Qian Long Kweh ◽  
Wen-Min Lu ◽  
Kaoru Tone ◽  
Mohammad Nourani
Keyword(s):  
Least Squares ◽  
Resource Utilization ◽  
Intellectual Capital ◽  
Risk Measures ◽  
Value Added ◽  
Ordinary Least Squares ◽  
Investment Efficiency ◽  
Content Type ◽  
Monetary Value ◽  
The Impact

PurposeThe purpose of this study is twofold. First, this research estimates banks' efficiencies from the perspectives of resource utilization and investment after incorporating risk measures as an exogenous input in the investment-efficiency stage. Second, the current study examines the relationship between intellectual capital (IC) and banks' efficiencies.Design/methodology/approachFirst, this study uses a dynamic network data envelopment analysis approach in investigating the efficiencies of 24 Taiwanese banks in 2007–2018 from two perspectives. Second, this research utilizes various regression techniques, namely, ordinary least squares (OLS), robust least squares and truncated regression, to gauge the impact of IC on banks' efficiencies. Typically, IC is determined based on a monetary value-based measure and value-added intellectual coefficient (VAICTM).FindingsResource-utilization (investment) efficiencies were observed as 0.941 (0.964), thereby contributing to the mean overall efficiency of the sample banks at 0.952. However, the related efficiency changes decline over the sample period, thereby suggesting that the average banks' efficiencies hardly increase. Regression analyses show a significantly positive relationship between IC and banks' overall resource-utilization and investment efficiencies.Research limitations/implicationsOverall, this study suggests that researchers should consider risks when estimating banks' efficiencies owing to their connection to banks' investment performance. From banks' dynamic two-stage efficiencies, this study demonstrated that investments in IC will bring improved future economic benefits.Originality/valueDifferent from prior studies, this study improves banks' efficiency evaluation models by incorporating risk measures and assuming weighted periods for the 2007–2008 global financial crisis. Moreover, the use of monetary value-based measure of IC provides consistent results as the commonly-used VAICTM does.

Intellectual capital and profitability in an emerging insurance market

2017 ◽  
Vol 33 (1) ◽  
pp. 2-19 ◽  
Author(s):  
Nicholas Asare ◽  
Abdul Latif Alhassan ◽  
Michael Effah Asamoah ◽  
Matthew Ntow-Gyamfi
Keyword(s):  
Intellectual Capital ◽  
Value Added ◽  
Ordinary Least Squares ◽  
Insurance Market ◽  
Insurance Companies ◽  
Content Type ◽  
Life Insurers ◽  
Main Driver ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to examine the relationship between intellectual capital (IC) and profitability of insurance companies in Ghana. Design/methodology/approach Data on 36 life and non-life insurance companies from 2007 to 2011 are employed to estimate the value added intellectual coefficient of Pulic (2004, 2008). Using return on assets and underwriting profit as indicators of profitability, the ordinary least squares panel corrected standard errors of Beck and Katz (2005) is used in estimating the relationship in the presence of serial correlation and heteroskedasticity. Leverage, underwriting risk and insurers’ size are used as control variables. Findings Non-life insurers have high IC performance comparative to life insurers. This study finds a significant positive relationship between IC and profitability of insurers in Ghana while human capital efficiency is the main driver of insurers’ IC performance. Practical implications The study discusses relevance of IC for management of insurance companies in Ghana and other emerging insurance markets in Africa. Originality/value This appears to be the first study to examine the impact of IC on profitability of a developing insurance market in Africa.

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.

Intellectual capital: a determinant of firms' operational efficiency

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Kanishka Gupta ◽  
T.V. Raman
Keyword(s):  
Intellectual Capital ◽  
Stochastic Frontier Analysis ◽  
Stock Exchange ◽  
Stochastic Frontier ◽  
Value Added ◽  
Financial Sector ◽  
Operational Efficiency ◽  
Content Type ◽  
Frontier Analysis ◽  
The Impact

PurposeIntellectual capital (IC) has been recognized in improving the efficiency of businesses and gaining competitive edge in the developed world. The present study offers perspectives into the effect of IC on the efficiency of the Indian financial sector companies.Design/methodology/approachFor the purpose of evaluating efficiency, the research has used stochastic frontier analysis (SFA). All Indian financial sector companies listed in National Stock Exchange (NSE-500) for the timeframe of ten years (2008–2018) have been considered. The paper has employed modified Pulic's Value Added Intellectual Coefficient (VAICTM) as a proxy to measure IC. Correlation and panel data regression have been used in order to examine the relationship.FindingsThe results of the study indicate positive and significant relationship between IC and efficiency of the firm. The results also show that all the components of IC, that is, human capital, relational capital, process capital and capital employed have a significant impact on firms' efficiency. Additionally, it has been seen that sample companies do not invest in research and development leading to no innovation capital.Practical implicationsThe research will assist managers in managing and controlling the IC, investors in matters related to investment and financial experts in improving the company's IC and value creation.Originality/valueThe current research is one of the pioneering studies in the context of Indian financial sector that examines the impact of modified VAIC on operational efficiency calculated using SFA.

Intellectual capital and firm performance in emerging economies: the case of India

2016 ◽  
Vol 26 (3) ◽  
pp. 410-430 ◽  
Author(s):  
Santi Gopal Maji ◽  
Mitra Goswami
Keyword(s):  
Firm Performance ◽  
Intellectual Capital ◽  
Value Added ◽  
Relative Importance ◽  
Content Type ◽  
Knowledge Based ◽  
Traditional Sector ◽  
Steel Sector ◽  
Capital Efficiency ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of intellectual capital (IC) on Indian traditional sector and compare the relative importance of IC on corporate performance of Indian knowledge-based sector (engineering sector) and traditional sector (steel sector). Design/methodology/approach Secondary data on 100 listed Indian firms, comprising of 44 firms from the engineering sector and 56 from the steel sector, are collected from “Capitaline Plus” Corporate database for a period of 14 years from 1999-2000 to 2012-2013. IC and its components are computed using Pulic’s value-added intellectual coefficient model and firm performance is measured by return on asset. Fixed effect regression model is used to investigate the hypothetical relationship between IC and firm performance. Further, quantile regression is used to check the robustness of the results. Findings The results indicate that IC efficiency and physical capital efficiency are positively and significantly associated with the firm performance for both the sectors. Regarding the components of IC, the coefficient of human capital efficiency is positive and significant, but the present effort fails to disentangle any significant influence of structural capital efficiency on firm performance. However, the results indicate that the influence of IC efficiency on firm performance is significantly greater in case of knowledge-based sector than that of traditional sector. Practical implications The findings of the study are useful for the decision makers, as the results indicate that the IC plays crucial role in value creation not only for knowledge-based firms but also for the firms belonging to the traditional manufacturing sector. Originality/value In the Indian context, this is the first study to examine the relative importance of IC in a knowledge-based sector and a traditional sector using appropriate methodology.

Intellectual capital and supply chain resilience

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Muhammad Shujaat Mubarik ◽  
Nick Bontis ◽  
Mobasher Mubarik ◽  
Tarique Mahmood
Keyword(s):  
Supply Chain ◽  
Least Squares ◽  
Partial Least Squares ◽  
Intellectual Capital ◽  
Structural Equation ◽  
Content Type ◽  
Supply Chain Resilience ◽  
Structural Capital ◽  
The Impact

PurposeThe main objective of this study is to test whether firms with a higher level of intellectual capital (IC) perform better in terms of their supply chain resilience compared to those with lower levels of IC. Likewise, the study also examines the impact of IC (characterized by human capital, relational capital and structural capital) on supply chain resilience directly and through supply chain learning.Design/methodology/approachData were collected from the 159 processed-food sector firms using a close-ended questionnaire during the corona virus 2019 (COVID-19) pandemic. Partial least squares structural equation modelling (PLS-SEM), partial least squares multigroup analysis (PLS-MGA) and one-way analysis of variance (ANOVA) were used to test a set of hypotheses emanating from a conceptual model of IC and supply chain resilience.FindingsEmpirical results revealed a significant influence of all dimension of IC on a firm's supply chain learning and supply chain resilience. Likewise, findings also exhibit a momentous role of supply chain learning in reinforcing the impact of IC on supply chain resilience. Cross-firm size comparison reveals that supply chain resilience of firms with a higher level of IC performed significantly better than those with lower levels of IC. Firms with a higher level of structural capital had a highly resilient supply chain.Practical implicationsFindings of the study imply that IC and supply chain learning should be considered as a strategic tool and should be strategically developed for uplifting a supply chain performance of a firm. The development of IC and supply chain learning (SCL) not only improves the supply chain resilience of a firm but also can help to integrate the internal and external knowledge for harnessing supply chain resilience.Originality/valueThis research study was conducted during the COVID-19 pandemic which provides a unique setting to examine resiliency and learning.

The impact of gender inequality in education and employment on economic performance in Turkey: evidence from a cointegration approach

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ömer Esen ◽  
Gamze Yıldız Seren
Keyword(s):  
Least Squares ◽  
Economic Performance ◽  
Ordinary Least Squares ◽  
Estimation Methods ◽  
Content Type ◽  
Cointegration Tests ◽  
Johansen Cointegration ◽  
Education And Employment ◽  
The Impact

PurposeThis study aims to empirically examine the impact of gender-based inequalities in both education and employment on economic performance using the dataset of Turkey for the period 1975–2018.Design/methodology/approachThis study employs Johansen cointegration tests to analyze the existence of a long-term relation among variables. Furthermore, dynamic ordinary least squares (DOLS) and fully modified ordinary least squares (FMOLS) estimation methods are performed to determine the long-run coefficients.FindingsThe findings from the Johansen cointegration analysis confirm that there is a long-term cointegration relation between variables. Moreover, DOLS and FMOLS results reveal that improvements in gender equality in both education and employment have a strong and significant impact on real gross domestic product (GDP) per capita in the long term.Originality/valueThe authors expect that this study will make remarkable contributions to the future academic studies and policy implementation, as it examines the relation among the variables by including the school life expectancy from primary to tertiary based on the gender parity index (GPI), the gross enrollment ratio from primary to tertiary based on GPI and the ratio of female to male labor force participation (FMLFP) rate.

Quantitative impacts of mandatory integrated reporting

2019 ◽  
Vol 17 (4) ◽  
pp. 604-634 ◽  
Author(s):  
Elaine Conway
Keyword(s):  
Financial Performance ◽  
Financial Risk ◽  
Risk Measures ◽  
Ordinary Least Squares ◽  
Mandatory Reporting ◽  
Stock Exchanges ◽  
Integrated Reporting ◽  
Content Type ◽  
Environmental Goals ◽  
The Impact

Purpose This paper aims to examine the impact of the 2011 mandatory introduction of integrated reporting (<IR>) on the financial performance, risk and institutional shareholding of listed companies in South Africa to assess whether there is a benefit to <IR> and which may encourage greater adoption of it globally. It contrasts the results with two other African stock exchanges (Nigeria and Egypt with no mandatory <IR>) and examines whether <IR> quality also has an impact on these and on environmental, social and governance (ESG) disclosure scores. Design/methodology/approach A series of multivariate ordinary least squares regressions was estimated on a range of financial, risk, institutional and ESG data from firms on the three African stock exchanges, between 2006 and 2015. Findings Financial performance and risk in South African firms appear to have decreased since the start of mandatory reporting, but institutional shareholding has increased. The production of higher quality reports is associated with decreased financial performance and risk, higher institutional shareholding and increased ESG scores. Originality/value This study is first to test the quantitative effects of <IR> and <IR> quality on a broad range of financial performance and risk measures and the level of institutional shareholding. It also adds to the literature by assessing how the quality of <IR> can impact the ESG scoring of the business. Hence, this study is of interest to firms looking to adopt <IR> for its benefits and to regulatory bodies considering the mandatory adoption of <IR> in support of achievement of national social and environmental goals.

scholarly journals The human capital–economic growth nexus in SSA countries: what can strengthen the relationship?

2020 ◽  
Vol 47 (9) ◽  
pp. 1143-1159
Author(s):  
Roseline Tapuwa Karambakuwa ◽  
Ronney Ncwadi ◽  
Andrew Phiri
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Least Squares ◽  
Ordinary Least Squares ◽  
African Countries ◽  
Content Type ◽  
Econometric Approach ◽  
The Impact ◽  
The Relationship ◽  
Ssa Countries

PurposeThe purpose of this study is to examine the impact of human capital on economic growth for a selected sample of nine SSA countries between 1980 and 2014 using a panel econometric approach.Design/methodology/approachThe authors estimate a log-linearized endogenous using the fully modified ordinary least squares (FMOLS) and the dynamic ordinary least squares (POLS) applied to our panel data time series.FindingsThe empirical analysis shows an insignificant effect of human capital on economic growth for our selected sample. These findings remain unchanged even after adding interactive terms to human capital, which are representatives of government spending as well as foreign direct investment. Nevertheless, the authors establish a positive and significant effect of the interactive term between urbanization and human capital on economic growth.Practical implicationsThe results emphasize the need for African policymakers to develop urbanized, “smart”, technologically driven cities within the SSA region as a platform toward strengthening the impact of human capital-economic growth relationship.Originality/valueThis study becomes the first in the literature to validate the human capital–urbanization–growth relationship for African countries.

Mandatory CSR expenditure and stock return

2020 ◽  
Vol 28 (6) ◽  
pp. 951-975
Author(s):  
Asit Bhattacharyya ◽  
Md Lutfur Rahman
Keyword(s):  
Least Squares ◽  
Stock Returns ◽  
Least Squares Method ◽  
Negative Impact ◽  
Generalized Method Of Moments ◽  
Ordinary Least Squares ◽  
Reverse Causality ◽  
Endogeneity Bias ◽  
Content Type ◽  
The Impact

Purpose India has mandated corporate social responsibility (CSR) expenditure under Section 135 of the Indian Companies Act, 2013 – the first national jurisdiction to do so. The purpose of this paper is to examine the impact of mandated CSR expenditure on firms’ stock returns by using actual CSR spending data, whereas the previous studies mostly focus on voluntary CSR proxied by CSR scores. Design/methodology/approach The authors estimate their baseline regression by using ordinary least squares(OLS) method. Although the baseline regression involving CSR expenditure and stock returns using ordinary least squares method are estimated, endogeneity and reverse causality biases are addressed by using two-stage least squares and generalized method of moments approaches. These approaches contribute mitigating endogeneity bias and biases associated with unobserved heterogeneity and simultaneity. Findings The findings document that mandatory CSR expenditure has a negative impact on firms’ stock returns which supports the “shareholders” expense’ view. This result remain robust after controlling for endogeneity bias and the use of both standard and robust test statistics. The authors however observe that this result holds for the firms with actual CSR expenditure equal to the mandated amount but does not hold for the firms with actual CSR expenditure greater than the mandated amount. Therefore, the authors provide evidence that CSR expenditure’s impact on stock returns depends on whether firms simply comply the regulation or voluntarily chose an amount of CSR expenditure above the mandated amount. Originality/value The primary contribution is to present a valid and robust evidence of negative effect of mandated CSR spending on firms’ stock returns when the mandatory CSR spending rule is already in place. This study contributes by examining the impact of mandated CSR spending on stock during post-implementation period (2015-2017), whereas other studies by Dharampala and Khanna (2018); Kapoor and Dhamija (2017); and Mukherjee et al. (2018) mainly examined the impact of legislation on Indian CSR. The authors use mandated actual CSR expenditure, whereas previous studies mostly focus on voluntary CSR proxied by CSR scores.

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.

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