Intellectual capital vs the book-value of assets

2014 ◽  
Vol 15 (1) ◽  
pp. 65-82 ◽  
Author(s):  
Sang Ho Kim ◽  
Dennis Taylor
Keyword(s):  
Human Capital ◽  
Intellectual Capital ◽  
Value Relevance ◽  
Share Price ◽  
Annual Reports ◽  
Content Type ◽  
Book Value ◽  
Listed Firms ◽  
Structural Capital ◽  
Tangible Assets

Purpose – The purpose of this paper is to provide new evidence, made possible by human capital data that became available after IFRS adoption, on the productivity of intellectual capital and its components. These productivity measures are modelled to determine their value-relevance in the share market, and the modelling is extended to comparative productivity measures for the book-value of assets. Design/methodology/approach – Financial data are sourced from financial databases and company annual reports on a sample of 160 Australian listed firms over a five-year period. Panel regression analysis is used to test five models built from Riahi-Belkaoui's (1999) general price model of the value-relevance of accounting numbers. Findings – The results show that the productivity of human capital, structural capital and intellectual capital are each significantly positively related to share price (i.e. have value-relevance), whereas the productivity of total assets at book-value is non-significant and tangible assets is inversely significant. Originality/value – This study constructs a new improved method of computing the amount of structural capital, and uses recently available financial statement data to provide first-time evidence on human capital and its inclusion in the determination of the amount of intellectual capital. These new models and data enable a direct comparison to be made between the value-relevance of intellectual and the book-value of assets.

The value relevance of environmental performance: evidence from Indonesia

2017 ◽  
Vol 13 (4) ◽  
pp. 817-827 ◽  
Author(s):  
Susi Sarumpaet ◽  
Melinda Lydia Nelwan ◽  
Dian Nirmala Dewi
Keyword(s):  
Environmental Performance ◽  
Value Relevance ◽  
Share Price ◽  
Annual Reports ◽  
Content Type ◽  
Share Prices ◽  
Listed Firms ◽  
Market Values ◽  
The Press ◽  
The Relationship

Purpose This paper aims to extend previous developed market-based research on the value relevance of environmental performance by testing the relationship between share prices of Indonesian-listed corporations and their environmental performance ratings. Design/methodology/approach The sample consists of 60 listed firms which are rated by the Indonesia Ministry of Environment between 2002 and 2012, resulting in a sample of 246 observations. The Ohlson (1995) model was utilized and modified by including environmental ratings. Findings The research finds that superior environmental performance is associated with higher share price, whereas inferior environmental performance is value irrelevant to the market. Research limitations/implications Considering the significance of PROPER, this research did not observe other types of corporate environmental performance, such as those released by the press and reported in the company annual reports and websites. These limitations are not controlled for in the tests, and this might confound inferences. Originality/value The paper addresses a gap in the literature by providing insight on how a developing capital market values both superior and inferior environmental performance. It also provides implication on the effectiveness of environmental monitoring policy in providing incentives for firms to improve their environmental performance

Intangible assets as possible indicators for the growth of the Hungarian firms

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Klára Katona
Keyword(s):  
Human Capital ◽  
Intellectual Capital ◽  
Intangible Assets ◽  
Annual Reports ◽  
Labor Costs ◽  
Community Innovation Survey ◽  
Content Type ◽  
Explanatory Variables ◽  
Structural Capital ◽  
The Impact

Purpose Intellectual capital has become one of the most important factors in the knowledge economy. It is the combination of human capital and structural capital. The purpose of this paper is to examine the effect of intellectual capital, especially the effect of structural capital on the productivity of Hungarian firms between 2007 and 2017. Design/methodology/approach This paper analyzes the impact of intellectual capital on the output of the Hungarian firms in a fixed effect dynamic model, using the lagged dependent and explanatory variables method. This study is based on annual reports of Hungarian enterprises. Findings This study proved that intellectual capital was a relevant source of the effectiveness of the firms in Hungarian industry in the examined period, and structural capital had the strongest impact on productivity of the firms. Research limitations/implications The annual report as database nonetheless bears the specificity and the limitation of the model alike. Labor costs, the proxy for human capital can measure the level only indirectly. Intangible assets, the proxy for structural capital contain more items which are optional. Practical implications The results reflect that the internally developed knowledge became the most relevant source for Hungarian firms to increase their productivity, but externally generated innovation may offer further possible sources to boost their own efficiency. Originality/value Unlike the previous empirical research in Hungary the source of variables in this model is based on the data of annual reports. This database allows to examine a larger panel investigation for a longer period than those methods which collect data on a voluntary basis, e.g. Community Innovation Survey.

Intellectual capital efficiency and corporate book value: evidence from Nigerian economy

2018 ◽  
Vol 19 (3) ◽  
pp. 644-668 ◽  
Author(s):  
Mutalib Anifowose ◽  
Hafiz Majdi Abdul Rashid ◽  
Hairul Azlan Annuar ◽  
Hassan Ibrahim
Keyword(s):  
Dynamic System ◽  
Cash Flow ◽  
Intellectual Capital ◽  
Value Relevance ◽  
Stock Exchange ◽  
Economic Value ◽  
Value Added ◽  
Content Type ◽  
Book Value ◽  
Listed Firms

Purpose The purpose of this paper is to examine the value relevance of intellectual capital (IC) by analysing the relationship between IC efficiency (ICE) and corporate book value of listed firms on main board of Nigeria Stock Exchange. Design/methodology/approach This study applies the resource-based theory in formulating two hypotheses that guide the results analysis. By employing a two-step dynamic system generalised method of moments (GMMs), and controlling for the possible endogeneity effect on the parameters estimated, for a sample of 91 listed firms on main board of Nigeria Stock Exchange, this study investigates the association of ICE and corporate book value, namely, cash flow from operation and economic value added (EVA), using data over the 2010 to 2014 financial years. Findings The results show a significant positive relationship between overall ICE and corporate book value (cash flow from operation and EVA). This study contributes to recent evidence concerning the value relevance of IC information to investors and other interested stakeholders. Research limitations/implications The generalisation of the results to smaller firms, in the alternative securities market, may be inappropriate as study sampled listed firms on the main board of Nigerian Stock Exchange. Practical implications Those charged with governance should be concerned with the investment and management of IC as it enhances the economic value and operating cash flow in line with the resource-based theory. Originality/value This study is first to consider the ICE study across all sectors in the Nigerian economy using modified Pulic value added intellectual capital. The study controls for heteroscedasticity and endogeneity issues by adoption of two-step dynamic system GMMs.

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.

Is Share Ownership a Condition for the Voluntary Revelation of Human Capital?

2020 ◽  
Vol 7 (2) ◽  
pp. 21-36
Author(s):  
Ruth Leticia Hidalgo ◽  
Amada Hidalgo ◽  
Miguel Ángel Oropeza ◽  
Eleazar Villegas ◽  
Sofía Elizabeth Ávila
Keyword(s):  
Human Capital ◽  
Empirical Evidence ◽  
Intellectual Capital ◽  
Career Advancement ◽  
Training And Development ◽  
Annual Reports ◽  
Listed Firms ◽  
Quality Life ◽  
The Family

Previous studies affirm the importance of intellectual capital (IC) for organizations, since they acquire value and make them more competitive in the market. In this context, the empirical evidence shows that the key ingredient classification of IC is human capital (HC). The purpose of this study is to know what kind of Mexican companies listed are those that voluntarily disclose the HC, as to date there is no evidence of this information. That is why the authors consider a sample of 875 annual reports, corresponding to 85 Mexican listed firms during the period 2005-2015. These samples reveal that the largest companies in terms of number of employees, belonging to the construction and textile sectors, and shares are held by the family, and they are most likely to disclose aspects of HC. Thus, the authors determine that items occupying the top positions relate to the experiences as managers and employees as well as training and development, just as the information unless disclosed refers to the opportunity for career advancement and quality life at work.

Intellectual capital and knowledge generation: an empirical study from Colombian public universities

2020 ◽  
Vol 21 (6) ◽  
pp. 1053-1084
Author(s):  
John Salinas-Ávila ◽  
René Abreu-Ledón ◽  
Johnny Tamayo-Arias
Keyword(s):  
Human Capital ◽  
Intellectual Capital ◽  
Structural Equation ◽  
Online Survey ◽  
Public Universities ◽  
Knowledge Generation ◽  
Equation Modeling ◽  
Relational Capital ◽  
Content Type ◽  
Structural Capital

PurposeThe purpose of this paper is to provide empirical evidence on the relationships between the dimensions of intellectual capital (IC) and the generation of knowledge in public universities.Design/methodology/approachAn online survey was developed and administered in Colombia. A total of 209 researchers participated in the study. Data were collected through IC measurements concerning the research mission of the universities. Scientific publications from the respondents and the citations received were taken as proxies for the generation of knowledge. To test the hypotheses, structural equation modeling was used.FindingsHypotheses proposing a positive association between the dimensions of IC, namely, human capital, structural capital, and relational capital, and the generation of knowledge were tested. The findings highlight that human capital is indirectly and positively related to the generation of knowledge through relational capital, as well as through the path of structural capital-relational capital.Practical implicationsThe study suggests that directors of research at universities could improve the results of this activity by analyzing and understanding the dimensions of IC that contribute to the development of scientific capacities and the generation of knowledge.Originality/valueThis is one of the first studies that has examined the interrelationships between the dimensions of IC at universities and the generation of knowledge.

The relationship between corporate governance and intellectual capital

2019 ◽  
Vol 61 (2) ◽  
pp. 384-401 ◽  
Author(s):  
Amina Buallay ◽  
Allam Hamdan
Keyword(s):  
Corporate Governance ◽  
Firm Size ◽  
Intellectual Capital ◽  
Content Type ◽  
Listed Firms ◽  
Pooled Data ◽  
Structural Capital ◽  
Capital Efficiency ◽  
High Level ◽  
The Relationship

Purpose The purpose of this study is to examine the moderating role of firm size on the relationship between corporate governance (CG) and intellectual capital (IC) efficiency. Design/methodology/approach The methodology was a pooled data for three years (2012-2014) for 171 listed firms, resulting in 489 observations. Findings The findings revealed that the inclusion of firm size as a moderating variable has influenced positively only the relationship between CG principles and capital employed efficiency (CEE). Further, the finding showed that the two IC components namely, human capital efficiency and structural capital efficiency, tend to be higher with firms that high level of CG adoption. However, CEE tends to be higher with firms that have lower level of CG adoption. Other finding shows that CG index was significant with the three IC components. Originality/value Such information will help the stakeholders, investors, decision-makers, regulators, policymakers and scholars to improve their knowledge about IC. Furthermore, it will be useful for firms to place their priorities regarding the internal system and financial plans for effective and efficient use of CG and IC.

The effects of self-reflection on individual intellectual capital

2020 ◽  
Vol 21 (6) ◽  
pp. 1107-1124
Author(s):  
Zhining Wang ◽  
Shaohan Cai ◽  
Mengli Liu ◽  
Dandan liu ◽  
Lijun Meng
Keyword(s):  
Human Capital ◽  
Intellectual Capital ◽  
Equation Modeling ◽  
Relational Capital ◽  
Content Type ◽  
Self Reflection ◽  
Structural Capital ◽  
The Relationship ◽  
Individual Human ◽  
Three Components

PurposeThe aim of this paper is to develop a tool measuring individual intellectual capital (IIC) and investigate the relationship between self-reflection and IIC.Design/methodology/approachThis study developed a theoretical model based on social cognitive theory and the literature of self-reflection and intellectual capital (IC). This research collected responses from 502 dyads of employees and their direct supervisors in 150 firms in China, and the study tested the research model using structural equation modeling (SEM).FindingsThe results indicate that three components of self-reflection, namely, need for self-reflection, engagement in self-reflection and insight, significantly contribute to all the three components of IIC, such as individual human capital, individual structural capital and individual relational capital. The findings suggest that need for self-reflection is the weakest component to impact individual human capital and individual relationship capital, while insight is the one that mostly enhances individual structural capital.Practical implicationsThis paper suggests that managers can enhance employees' IIC by facilitating their self-reflection. Managers can develop appropriate strategies based on findings of this study, to achieve their specific goals.Originality/valueFirst, this study develops a tool for measuring IIC. Second, this study provides an enriched theoretical explanation on the relationship between self-reflection and IIC – by showing that the three subdimensions of self-reflection, such as need, engagement and insight, influence the three subdimensions of IIC, such as individual human capital, individual structural capital and individual relational capital.

Enhanced business reporting: value relevance and determinants of valuation-related disclosures

2017 ◽  
Vol 18 (4) ◽  
pp. 832-867 ◽  
Author(s):  
Christine Reitmaier ◽  
Wolfgang Schultze
Keyword(s):  
Decision Making ◽  
Content Analysis ◽  
Value Relevance ◽  
Annual Reports ◽  
Valuation Theory ◽  
Voluntary Disclosures ◽  
Content Type ◽  
Book Value ◽  
Business Reporting ◽  
Market Values

Purpose Enhanced business reporting (EBR) seeks to address the information needs of investors when making company valuations for investment decisions. The purpose of this paper is to analyze the relevance for market valuation of EBR disclosures that are directly related to firm valuation (value-based reporting (VBR)). Design/methodology/approach Data are hand collected from annual reports of German publicly listed companies over five years. The content analysis is based on the valuation-related disclosure framework of the German Schmalenbach Society of Business Administration. A 2SLS approach accounts for potential endogeneity. Findings Share-based compensation, leverage, corporate size, and share volatility are significant determinants of VBR. The level of VBR is significantly associated with market values and provides additional market value explanatory power, indicating its relevance to investors in the process of valuation and decision making. Also, the relevance of book value and earnings for explaining market values increases for firms with better VBR. The findings are robust to the exclusion of banks and assurance companies and to alternative model and variable specifications. Research limitations/implications The research contributes to the literature on voluntary disclosures by testing an EBR framework explicitly derived from valuation theory. The results provide indirect evidence of the investors’ use of respective valuation techniques in decision making. A contribution is made to the value relevance literature by showing that valuation-related disclosures constitute a suitable proxy for “other information” in the Ohlson’s (1995) model. Such disclosures complement traditional accounting metrics, i.e. book value and earnings, as basis for valuations. Potential caveats relate to the content analysis of annual reports and the endogeneity of voluntary disclosures. Originality/value This paper informs the debate on further developments of EBR in helping to identify important components thereof.

Does institutional ownership affect the value relevance of accounting information?

2020 ◽  
Vol 28 (2) ◽  
pp. 323-342
Author(s):  
Mohamed Omran ◽  
Yasean A. Tahat
Keyword(s):  
Value Relevance ◽  
Accounting Information ◽  
Market Value ◽  
Institutional Ownership ◽  
Financial Leverage ◽  
Content Type ◽  
Book Value ◽  
Share Prices ◽  
Listed Firms ◽  
Positive Effects

Purpose Drawing upon agency theory, this study aims to assess the value relevance (VR) of accounting information released by non-financial firms listed on the Kuwait stock exchange for the period of 2015-2018. Also, the influence of institutional ownership level and other explanatory variables, namely, book value per share, earnings per share, growth in assets and changes in financial leverage on share prices is examined. Design/methodology/approach To test the hypotheses, the Ohlson (1995) model is extended. This study uses panel data analysis and applies appropriate statistical techniques to measure empirical relationships. Findings The results show that the VR of accounting information released by the Kuwaiti non-financial listed firms varies over the period of 2015-2018. Book value and earnings have significant and positive effects on share prices. In recent years, the VR of book value information has been growing, while that of earnings information has been declining. Institutional ownership level has a significant and positive influence on the VR of accounting information released by the Kuwaiti non-financial listed firms. The findings confirm a positive power, signalling growth in assets regarding the share prices. However, no significant relationship between changes in financial leverage and share prices is found. Practical implications The findings of the study provide evidence of the linkage between VR and institutional ownership level, which promotes the understanding of the influence of institutional investors on a firm’s market value. Empirical evidence from Kuwait will have international implications and can serve as a guide for accounting researchers studying other emerging markets. Capital market regulators can provide guidelines in the form of information characteristics and elements of financial statements that need improvement. Finally, the findings assist non-financial listed firms to enhance the quality of accounting information by identifying the strengths and weaknesses in their financial reports. Originality/value This study extends the previous literature by investigating a relatively new set of data in more depth than that has been examined by prior research, which focusses on the relationship between accounting information and the firm’s market value.

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