Intellectual capital efficiency and market-based financial performance: Evidence from listed conglomerate companies

2021 ◽  
Vol 2 (2) ◽  
pp. 31-42
Author(s):  
Eniola Ayisat Sulaiman ◽  
Abubakar Sadiq Kasum ◽  
Wasiu Ajani Musa
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Fixed Effects ◽  
Value Added ◽  
Secondary Data ◽  
Lagrangian Multiplier ◽  
Fixed Effects Model ◽  
Analysis Technique ◽  
Capital Efficiency ◽  
The Impact

Having observed the rate at which dissimilarity occurs between market and book value, and management ignorance concerning the impact intellectual capital disclosure has on companies’ values spurred the interest to probe the association between the efficiency of value-added intellectual coefficient (VAIC) and market-based financial performance of listed Nigerian conglomerate companies. To accomplish the purpose of this study, secondary data were employed and extracted from annual audited reports of listed conglomerate companies in Nigeria from the period of 2010–2018. The data obtained were subjected to static panel data regression analysis technique. The random-effects model was adopted because the empirical result from Breusch and Pagan Lagrangian multiplier (BP-LM) and Hausman tests chose it over the fixed-effects model to produce better results. This study revealed that the value-added efficiency of capital employed (VACA), value-added efficiency of human capital (VAHU), and value-added efficiency of structural capital (STVA) are the drivers of intellectual capital in the conglomerate sector. This study concluded that elements of intellectual capital have a strong power on market-based financial performance. This study recommends that information on intellectual capital components should be reported in ways they deem fit by developing a model of intellectual capital disclosure that complies with the International Accounting Standard Board (IASB)

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 Intellectual Capital, Political Uncertainty and Firm Performance: Evidence from Pakistan

2021 ◽  
Vol 7 (2) ◽  
Author(s):  
Farheen Hussain ◽  
Ayub Khan Mehar
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Intellectual Capital ◽  
Stock Exchange ◽  
Value Added ◽  
Secondary Data ◽  
Political Uncertainty ◽  
Negative Effect ◽  
Performance Results ◽  
The Impact

This research has examined the impact of Intellectual Capital (IC) on performance of the firms in Pakistan while considering political uncertainty as moderating variable. The research used secondary data of firms, related to manufacturing sectors, listed in Karachi Stock Exchange - KSE 100 Pakistan for a ten-year period of 2010-2019. Value Added Intellectual Coefficient (VAIC) model by Pulic (1998) has been used to calculate IC and its components and ROA is used to measure firm’s performance. Regression Model has been employed to investigate the hypothetical relationship between IC and firm performance. Results of this paper revealed that CEE and CCE have a positive relationship with the financial performance of firms in Pakistan whereas SCE has negative effect on the financial performance of the firms. Furthermore, the findings suggest political instability as a significant moderating variable on the relationship among intellectual capital, its components and firms’ performance. This research is the first attempt in investigating the relative importance of intellectual capital success of any firm under political uncertainty.

scholarly journals Intellectual Capital, Technological Intensity and Firm Performance: The Case of Emerging Countries

2021 ◽  
Vol 68 (4) ◽  
pp. 459-479
Author(s):  
Mehtap Öner ◽  
Asli Aybars ◽  
Murat Çinko ◽  
Emin Avci
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Emerging Market ◽  
Value Added ◽  
Emerging Countries ◽  
Corporate Financial Performance ◽  
Positive Contribution ◽  
Capital Efficiency ◽  
Technological Intensity ◽  
The Impact

While neglecting the importance of technological intensity, most of the prior studies documented the positive contribution of intellectual capital (IC) to corporate financial performance. This study aims at analyzing the relation between IC and corporate financial performance addressing the technological intensity in different sectors from 17 emerging countries. The impact of IC, which is measured by Value Added Intellectual Coefficient (VAIC) and its components; Capital Employed Efficiency (CEE), Human Capital Efficiency (HCE), and Structural Capital Efficiency (SCE), on corporate financial performance will be evaluated using panel data analysis for the period between 2009-2019. Accordingly, IC and its components are found to be significant drivers of financial performance being higher for sectors that are more technology intensive. Moreover, human and physical capital are the main components, which boost finance performance for all groups irrespective of technological intensity in the emerging market context.

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.

scholarly journals The Influence of Intellectual Capital with Sub Components to Financial Performance: Empirical Study of Islamic Banking in Indonesia

2020 ◽  
Vol 5 (8) ◽  
pp. 877-882
Author(s):  
Toufan Aldian Syah ◽  
Akhmad Fauzan
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Value Added ◽  
Financial Statement ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Intangible Resources ◽  
Islamic Bank ◽  
Capital Efficiency ◽  
The Impact

- This paper aims to empirically examine the effect of intangible resources, namely intellectual capital (IC) on the financial performance of Islamic banking in Indonesia for the period 2013-2019. The data needed to calculate the different IC constituents comes from the financial statement data of each Islamic bank, which is the research sample, namely the Islamic bank, which is a foreign exchange bank. Value Added Intellectual Coefficient (VAIC) The methodology designed by Pulic is used to determine the impact of IC on Islamic banking's financial performance. The results show a significant positive relationship between the Sub-component Value Added Intellectual Coefficient (VAIC), namely Human Capital Efficiency (HCE), Structure Capital Efficiency (SCE), and Capital Employed Efficiency (CEE) which have a significant influence on the financial performance of Islamic banking proxied by ROA. Overall, the results show that HCE, SCE, and CEE strongly influence Islamic banks' ability to earn profits. The main limitation of this study lies in its measurement method, the VAIC methodology, which has been criticized by some researchers as not measuring IC. These findings can be useful input for Islamic bank management to manage and invest their resources in the Intellectual Capital (IC) in their institution. The main contribution of this paper is to identify the influence of the subcomponent of intellectual capital (IC) on the financial performance of Islamic banks, which was previously rare in Indonesia.

scholarly journals The Impact of Intellectual Capital on Firm Value: Empirical Evidence From Vietnam

2020 ◽  
Vol 11 (4) ◽  
pp. 74
Author(s):  
Anh Huu Nguyen ◽  
Duong Thuy Doan
Keyword(s):  
Stock Market ◽  
Intellectual Capital ◽  
Firm Value ◽  
Fixed Effects ◽  
Value Added ◽  
Least Square ◽  
Manufacturing Companies ◽  
Effective Measure ◽  
Capital Efficiency ◽  
The Impact

The paper aims to investigate the impact of intellectual capital on firm value in the context of Vietnam. The research sample includes 61 manufacturing companies listed on Vietnam stock market for the period from 2013 to 2018. Three statistical methods approaches are employed to address econometric issues and to improve the accuracy of the regression coefficients include Ordinary Least Square (OLS), Random Effects Model (REM) and Fixed Effects Model (FEM). This research uses value-added intellectual capital (VAIC) to measure the intellectual capital of a firm. Value-added intellectual capital (VAIC) is considered as an effective measure by which a company uses material, financial, and intellectual capital to increase. The VAIC includes the sum of three components: Human Capital Efficiency (HCE), Structure Capital Efficiency (SCE) and Capital Employed Efficiency (CEE, including physical and financial capital). In this paper, firm value is measured by Tobin’s Q ratio. Some control variables such as leverage, firm size, growth rate, and state capital are used in the regression model that pointed out the impact of intellectual capital on a firm value. The empirical results show a statistically significant positive impact of value-added intellectual capital (VAIC) on a firm’s profitability. This evidence provides a new insight to managers on how to improve the value of manufacturing companies listed on Vietnam stock market.

scholarly journals The Impact of Intellectual Capital on Financial Performance: A Study of Sri Lankan Financial Institution

2021 ◽  
Vol 04 (09) ◽  
Author(s):  
A. Nishanthini ◽  
Keyword(s):  
Human Capital ◽  
Financial Performance ◽  
Intellectual Capital ◽  
Negative Impact ◽  
Financial Institution ◽  
Value Added ◽  
Sri Lankan ◽  
Structural Capital ◽  
Capital Efficiency ◽  
The Impact

Intellectual Capital is essential in every economical activity. The aim of this study how intellectual capital impact on financial performance in Sri Lankan financial institution. To achieve objective of this research banking institution has been selected from Colombo Stock Exchange financial directory for the period from 2016 to 2020. Random sampling technique were used to analysis the data. MVIAC model used for the measurement of independent variable in this study. This model is a composite sum of two indicators these are Capital Employed Efficiency (CEE) - indicator of VA efficiency of capital employed and Intellectual Capital Efficiency (ICE) – indicator of value-added efficiency ofcompany’s Intellectual Capital base. Intellectual Capital Efficiency is composed of (a) Human Capital Efficiency (HCE) – indicator of value-added efficiency of human capital; and (b) Structural Capital Efficiency (SCE) – indicator of value-added efficiency of structural capital (c) Rational Capital Efficiency (RCE). Finding represent that intellectual capital has significant impact on financial performance of Sri Lankan financial institution, specially banking industry. SCE and CEE has negative impact while RCE impact positively on financial performance.

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.

scholarly journals The Effect Of Intellectual Capital On The Financial Performance Of Libyan Banks

2020 ◽  
Vol 5 (4) ◽  
Author(s):  
Khalad M. S. Alrafadi
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Commercial Banks ◽  
Positive Relationship ◽  
Value Added ◽  
Organizational Structures ◽  
Private Banks ◽  
The Impact

This study examines intellectual capital (IC) performance of Libyan banks during the period from 2004 to 2010, using value-added intellectual coefficient (VAIC) methodology, and investigates the impact of IC on financial performance. It identifies the IC components that may be the drivers of the traditional indicators of bank success. The results of the study showed that private banks are more concerned with the components of intellectual capital compared to commercial banks and specialized banks. The results also showed that there is a positive relationship between the components of the (VAIC) and the (ROA). The study recommended that Libyan banks should add a post or position to manage intellectual capital in their organizational structures to help structure relevant strategies and policies on how to obtain, utilize and develop the best resources required for intellectual capital.  

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.

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