The impact of intellectual capital on companies' market value and financial performance

Purpose The purpose of this paper is to analyze the relationship between firms’ intellectual capital (IC), financial performance (FP) and market value (MV) as well as the relationship between ownership concentrations on IC performance. Design/methodology/approach A large sample of non-financial listed firms belonging to 14 countries in Western Europe, for the period between 2004 and 2015, was investigated using the GMM system (1998) dynamic estimator and the effect of lagged explanatory variables on firm’s FP and MV. Findings The results reveal that IC is an important resource for firms’ value creation. Human capital is found to be a key factor of firms’ wealth. Results show that capital employed efficiency positively impacts on firms’ FP in the short run. The impact of IC components on firms’ MV may not be immediate. The structural capital positively affects firms’ FP in the long run. Also, the results reveal that ownership concentration and owners’ management involvement constrain firms’ IC performance. Originality/value The current study contributes to IC research by exploring a large sample of firms across countries in Western Europe using econometric modeling. Considering that the effect of IC on firms’ FP needs time to be realized, thus to be measured, the effect of lagged explanatory variables on performance was tested, using dynamic panel estimators, specifically the GMM system (1998) dynamic estimator.

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Impact of Intellectual Capital on Financial Performance and Market Valuation of Firms in India

International Letters of Social and Humanistic Sciences ◽

10.18052/www.scipress.com/ilshs.48.107 ◽

2015 ◽

Vol 48 ◽

pp. 107-122 ◽

Cited By ~ 9

Author(s):

G. Bharathi Kamath

Keyword(s):

Financial Performance ◽

Intellectual Capital ◽

Linear Regression Analysis ◽

Market Value ◽

Multiple Linear Regression Analysis ◽

Market Valuation ◽

True Value ◽

Service Sectors ◽

Real Picture ◽

The Impact

The Objective of this paper is to empirically investigate the impact of intellectual capital(IC) on the financial performance and market valuation of firms in India. Thirty firms from S&P BSE SENSEX index which consists of 30 firms from across various manufacturing and service sectors. The analysis was carried for a period from FY 2008-2009 to 2012-2013. Multiple linear Regression analysis is used to study the impact of IC on financial performance and market value of these select firms. The paper uses the VAICTM methodology to evaluate the data and finds that the financial performance and market value is indeed influenced by the IC of the firms. This result is crucial for firm’s management and policy makers to make IC disclosure and reporting mandatory in firms accounting statements as the stakeholder can get the real picture of the true value of the firm.

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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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PENGARUH INTELLECTUAL CAPITAL TERHADAP KINERJA KEUANGAN PERUSAHAAN DAN PENILAIAN PASAR DENGANCORPORATE GOVERNANCE SEBAGAI VARIABEL MODERASI

Jurnal Akuntansi Trisakti ◽

10.25105/jat.v2i2.4896 ◽

2015 ◽

Vol 2 (2) ◽

pp. 87

Author(s):

Citra Chairunissa ◽

Raden Rosiyana Dewi

Keyword(s):

Corporate Governance ◽

Financial Performance ◽

Intellectual Capital ◽

Sampling Method ◽

Stock Exchange ◽

Market Value ◽

Coefficient Of Determination ◽

Normality Test ◽

Negative Effect ◽

Positive Effect

The objective of the emperical study is to examine and to analyze 1) The Influence of Intellectual Capital to Financial Performance, 2 ) The Influence of Intellectual Capital to Market Value, 3) The Influence of Intellectual Capital to Financial Performance with Corporate Governance as an Moderating 4) The Influence of Intellectual Capital to Market Value with Corporate Governance as an Moderating Variable. The sample of this emperical study is the company financing company that listed in the Indonesia Stock Exchange (IDX) 2010-2012. This research uses purposive sampling method. Data analysis techniques include 1) Descriptive statistics, 2) Normality Test, 3) Classical Test Assumptions : Multicollinearity and Heteroskidastity , 4) Regression Testing : Coefficient of Determination Test , F Test , danUji T. The results of this empirical study are 1) Intellectual Capital significant positive effect on the company 's financial performance , 2) Intellectual Capital significant negative effect on market valuation , 3) Intellectual Capital no significant effect on the financial performance of companies with moderated Corporate Governance, 4) Intellectual Capital had no significant effect assessment of the performance market with moderated Corporate Governance

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

European Journal of Business Management and Research ◽

10.24018/ejbmr.2020.5.4.341 ◽

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.

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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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