An industry analysis of the power of human capital for corporate performance: Evidence from South Africa

Even in industrialised emerging economies, the value-generating competencies of a workforce, known as its human capital efficiency, are a key resource for commercial success. The objective of this research is to empirically investigate the relationship between human capital efficiency (as measured by value-added human capital) and the financial and market performance of companies listed on the Main Board and Alternative Exchange (ALT-X) of the Johannesburg Stock Exchange. Return on assets, revenue growth and headline earnings per share were used as financial performance indicators; while market-to-book ratio and total share return were used to measure market performance. Multivariate regressions were performed, with panel data covering 390 companies in the financial, basic materials, consumer services, consumer goods, industrial and technology industries from 2001 to 2011. First, human capital efficiency was found to have no effect on the market performance of listed companies in South Africa. Secondly, higher human capital efficiency was found to result in the extraction of greater returns from both tangible and intangible assets in all industries. Thirdly, higher profitability was found to be associated with higher human capital efficiency in almost every industry in South Africa, with the exception of the technology industry, where human capital efficiency was found to be independent of headline earnings per share. Finally, higher revenue growth was found to be positively associated with human capital efficiency in those industries which are not consumer-driven. In the consumer-driven industries, human capital efficiency contributes to bottom line profitability even though it is not a driver for revenue growth. Overall, the results of this study confirm that human capital efficiency enhances a company’s financial performance, whether it be through a greater capacity for production and service delivery, tighter cost controls or better use of company resources. Management in all South African industries are encouraged to develop the value-creating abilities of their employees through employer-driven personnel enrichment and training programs and by incentivising workers to pursue further education.

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Human Capital Efficiency and Financial Performance: Empirical Evidence of Malaysian Public Companies.

The Journal of Social Sciences Research ◽

10.32861/jssr.spi5.878.884 ◽

2018 ◽

pp. 878-884

Author(s):

Azlina Rahim ◽

Amrizah Kamaluddin ◽

Ruhaya Atan

Keyword(s):

Human Capital ◽

Financial Performance ◽

Value Added ◽

Annual Reports ◽

Public Companies ◽

Accounting Data ◽

Return On Equity ◽

Capital Efficiency ◽

Financial Performance Measures ◽

The Relationship

The purpose of this study is to investigate empirically the relationship between human capital efficiency and financial performance of Malaysian public companies. Using accounting data, this study reviewed the annual reports of Malaysian companies for a period of thirteen years from 2000 to 2012. The study applied Value Added Intellectual Coefficient (VAICTM) methodology developed by Ante Pulic to determine the human capital efficiency of a company. The regression models was construct to examine the relationship between human capital efficiency and financial performance measures including return on assets (ROA) and return on equity (ROE).The results revealed that human capital efficiency has significant and positive relationships with financial performance. The human capital efficiency is seen as a value driver for a company’s competitiveness. Hence, the findings of this study should help companies’ managers to make better decision pertaining to investment of their strategic asset that is human capital.

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Intellectual capital and Tobin’s Q as measures of bank performance

Accounting ◽

10.5267/j.ac.2021.4.029 ◽

2021 ◽

Vol 7 (7) ◽

pp. 1695-1700

Author(s):

Esra A. Al Nsour ◽

Ahmad A. Al Dahiyat ◽

Sulaiman Weshah

Keyword(s):

Human Capital ◽

Financial Performance ◽

Intellectual Capital ◽

Value Creation ◽

Stock Exchange ◽

Value Added ◽

Tobin’S Q ◽

Tobin's Q ◽

Amman Stock Exchange ◽

Capital Efficiency

This paper aims at examining the effect of the Value Added by Intellectual Capital (VAIC) in terms of its three components: capital employed efficiency, human capital efficiency, and structure capital efficiency on the financial performance of commercial banks listed on the Amman Stock Exchange for the period 2010–2018.Value Added of Intellectual Capital (VAIC) model was used to measure the intellectual capital while Tobin’s Q ratio was used as an indicator of bank financial performance. The study has used parametric techniques like multiple linear regression and correlation coefficient, and other statistical methods to investigate its hypothesis. It was found that only human capital efficiency and capital employed efficiency had impacts on the banks’ financial performance. These results emphasize the importance of using the VAIC model to evaluate the financial performance of these banks, as well as encourage banks to make further investments in intellectual capital’s components, and concentrate on human resources to build up their knowledge, skills and capabilities, because of their greatest role in value creation.

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Impact of Intellectual Capital on Financial Performance of Banks in Tanzania

Journal of International Business Research and Marketing ◽

10.18775/jibrm.1849-8558.2015.11.3002 ◽

2015 ◽

Vol 1 (1) ◽

pp. 17-24 ◽

Cited By ~ 5

Author(s):

Janeth N. Isanzu

Keyword(s):

Human Capital ◽

Financial Performance ◽

Intellectual Capital ◽

Value Added ◽

Physical Capital ◽

Annual Reports ◽

Balance Sheets ◽

Structural Capital ◽

Knowledge Based Economy ◽

Capital Efficiency

Since the financial sector reforms took place in the last two decades, Banks in Tanzania have continued to play the major role in reshaping the economy of the nation. With the emergence of knowledge based economy many firm have changed their way of doing business instead of relying more on physical capital they have shifted to intellectual capital. This is no exception for the banks operating in developing counties Tanzania included. Many studies have been done in the area of intellectual capital and its contribution to the value of the firm. This study sets out to extend the evidence by investigating the intellectual capital of banks operating in Tanzania for the period of four years from 2010 to 2013. Annual reports, especially the profit and loss accounts and balance sheets of the selected banks have been used to obtain the data. The study uses Value Added Intellectual Capital model (VAICTM) in determining intellectual capital and its three major components like Human Capital Efficiency (HCE) Structural capital efficiency (SCE) and Capital Employed Efficiency (CEE). The results revealed that Intellectual capital has a positive relationship with financial performance of banks operating in Tanzania and also when the VAICTM was divided into its three components it was discovered that the financial performance is positively related to Human capital efficiency and Capital employed efficiency but is negatively related to Structural capital efficiency.

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The Impact of Intellectual Capital on Firms’ Performance: Evidence from Saudi Arabia

Accounting and Finance Research ◽

10.5430/afr.v9n4p44 ◽

2020 ◽

Vol 9 (4) ◽

pp. 44

Author(s):

Afnan Alturiqi ◽

Khamoussi Halioui

Keyword(s):

Human Capital ◽

Saudi Arabia ◽

Intellectual Capital ◽

Market Performance ◽

Value Added ◽

Positive Association ◽

Structural Capital ◽

Capital Efficiency ◽

The Impact ◽

The Relationship

The purpose of this study is to empirically investigate the relationship between intellectual capital (IC) measured by the value-added intellectual coefficient (VAIC) and firms’ performance (FP) in the Saudi context. Data are drawn from a sample of 25 Saudi firms listed on the Saudi Stock Exchange (Tadawul) for the period 2015-2018. Using the VAIC model, the multiple linear regression models were constructed to examine the relationship between intellectual capital (IC) and firms’ performance (measured in terms of financial and market performance). The findings indicate that there is a positive association between overall intellectual capital efficiency as well as each of its three components (human capital efficiency, structural capital efficiency, capital employed efficiency) and the firms’ financial performance. Additionally, there is a positive association between human capital efficiency(HCE), structural capital efficiency (SCE), and the firms’ market performance. Overall, the findings suggest that human capital efficiency (HCE) has a significant and positive impact on firms’ financial and market performance in Saudi Arabia. The VAIC method may be a useful tool for managers and investors in their decision process. This is the first study about the impact of intellectual capital on firms’ performance in four industry groups in Saudi Arabia using the VAIC model.

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PENGARUH INTELLECTUAL CAPITAL TERHADAP KINERJA KEUANGAN PERUSAHAAN SEKTOR PERTAMBANGAN DI BURSA EFEK INDONESIA

E-Jurnal Manajemen Universitas Udayana ◽

10.24843/ejmunud.2019.v08.i09.p17 ◽

2019 ◽

Vol 8 (9) ◽

pp. 5702

Author(s):

Maulana Hidayat ◽

I Made Dana

Keyword(s):

Human Capital ◽

Financial Performance ◽

Intellectual Capital ◽

Stock Exchange ◽

Value Added ◽

Return On Assets ◽

Mining Sector ◽

Regression Methods ◽

Structural Capital ◽

Capital Efficiency

The value of the company's resources can be measured using Intellectual Capital. A company can measure the value added by the company through the company's resources by using Intellectual Capital. This study aims to examine and analyze the influence of independent variables Human Capital Efficiency (HCE), Structural Capital Efficiency (SCE) and Capital Employed Efficiency (CEE) on the dependent variable, Return on Assets (ROA). Population in this study are mining sector companies in the Indonesia Stock Exchange. The research sample used a purposive sampling method to obtain 41 mining sector companies in the Indonesia Stock Exchange for the period 2016-2017 that met the research criteria. Data that has been collected will be analyzed using multiple linear regression methods and classical assumption tests. The study found that HCE and SCE had no effect on ROA, whereas CEE had a positive effect on ROA. This shows the factors that influence the financial performance of mining sector companies capital employee of the company. The manager of the mining sector company is expected to be able to increase the use of human capital and structural capital in the company's operations to increase its influence on the company's financial performance. Keywords: financial performance; intellectual capital; return on assets

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Human Capital Efficiency and Financial Performance: Empirical Evidence of Malaysian Public Companies

The Journal of Social Sciences Research ◽

10.32861/jssr.spi1.11.17 ◽

2019 ◽

pp. 11-17

Author(s):

Azlina Rahim ◽

Amrizah Kamaluddin ◽

Ruhaya Atan

Keyword(s):

Human Capital ◽

Financial Performance ◽

Value Added ◽

Annual Reports ◽

Public Companies ◽

Accounting Data ◽

Return On Equity ◽

Capital Efficiency ◽

Financial Performance Measures ◽

The Relationship

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

INTERNATIONAL JOURNAL OF MULTIDISCIPLINARY RESEARCH AND ANALYSIS ◽

10.47191/ijmra/v4-i9-21 ◽

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.

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The Influence of R&D Intensity on Financial Performance: The Mediating Role of Human Capital in the Semiconductor Industry in Taiwan

Sustainability ◽

10.3390/su12125128 ◽

2020 ◽

Vol 12 (12) ◽

pp. 5128

Author(s):

Tsung-Chun Chen ◽

Yenchun Jim Wu

Keyword(s):

Human Capital ◽

Financial Performance ◽

Capital Investment ◽

Performance Metrics ◽

Intangible Assets ◽

Semiconductor Industry ◽

Value Added ◽

Positive Influence ◽

High Tech ◽

The Relationship

Knowledge transfer is a strategy used by high-tech companies to acquire new knowledge and skills. Knowledge can be internally generated or externally sourced. The access to external knowledge is a quick fix, but the risks associated with reliance on external sources are often overlooked. However, not acquiring such knowledge is even riskier. There have been a slew of litigations in the semiconductor industry in recent years. The acquisition and assurance of intangible assets is an important issue. This paper posits that internal R&D should take into consideration the knowledge intensity and capital investment in the industry. This study focuses on the relationship between intangible assets and financial performance. It sourced the 2004 to 2016 financial data of semiconductor companies in Taiwan for panel data modeling and examined case studies for empirical validation. This study found that the higher the R&D intensity (RDI) in the value-added component of human capital, the better the financial performance of the company. RDI has a positive influence on the accumulation of human capital and financial performance metrics, and such influence is deferred. Meanwhile, human capital is a mediating factor in the relationship between RDI and financial performance. RDI is integral to the semiconductor industry’s pursuit of business sustainability.

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Intellectual Capital Investment, Stakeholders' Value, Firm Market Value and Financial Performance: The Case of Tunisia Stock Exchange

Journal of Information & Knowledge Management ◽

10.1142/s021964921350010x ◽

2013 ◽

Vol 12 (02) ◽

pp. 1350010 ◽

Cited By ~ 1

Author(s):

Hedia Fourati ◽

Habib Affes

Keyword(s):

Human Capital ◽

Financial Performance ◽

Intellectual Capital ◽

Capital Investment ◽

Positive Impact ◽

Stock Exchange ◽

Value Added ◽

Market Value ◽

Market Valuation ◽

Using Data

The purpose of this paper is to investigate the role of intellectual capital investment in improving the firm's market value, stakeholders' value and financial performance. Using data drawn from 21 listed companies in Tunisia Stock Exchange, we conducted two studies. On one hand, from using Charreaux (Charreaux (2006). La valeur partenariale: Vers une mesure opérationnelle. Cahier de FARGO no. 1061103, November) measure of stakeholders' value, we demonstrate that financials come to present the weakest stakeholders' value and clients monopolises in term of value acquisition due to a weak ability of negotiation of firms. On the other hand, we construct a regression model of Pulic's value added intellectual capital investment (VAIC) as the measure of the value added from intellectual capital, in market valuation and financial performance. Our results stressed the fact that there is a positive impact of intellectual capital by human capital efficiency and capital employed efficiency on improving firm's market value. Nevertheless, financial performance measured by ROA is still justified by the traditional measure relying on capital employed efficiency. Indeed for Tunisian quoted firms, human capital investment is a pilar for ameliorating firm market valuation of financial performance.

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

Corporate and Business Strategy Review ◽

10.22495/cbsrv2i2art4 ◽

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)

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