Impact of Intellectual Capital on Firms' Market Value and Financial Performance: Empirical Evidence from Pakistan

• Published in: NUML international journal of business & management Vol. 13; no. 1; pp. 22 - 34
• Main Authors: Rashid, Muhammad Khalid, Niazi, Abdul Aziz Khan, Noreen, Misbah
• Format: Journal Article
• Language: English
• Published: Islamabad National University of Modern Languages, Faculty of Management Sciences 01-06-2018
• Subjects: Accounting; Balance sheets; Banking industry; Behavioral sciences; Business administration; Economic development; Employees; Financial reporting; Financial services; Human capital; Insurance companies; Intangible assets; Intellectual capital; Investigations; Knowledge; Management science; Stockholders; Studies; Value added; Pakistan; Iran
• ISSN: 2410-5392; 2521-473X

The objective of this study is examine the influence of intellectual capital (IC hereafter) on performance offirm market value of organization. The sample contains listed firms of Pakistan. Data were collected for the period ranging from 2003-2016. In this study Value Added Intellectual Coefficient (VAIC) methodology is applied for investigation. The impact of value added coefficient is seen on firm performance and firm's market value separately, and then the impact of elements of value added intellectual coefficient is investigated accordingly. Panel data regression is used to analyze the empirical relationships. The results show that there is no significant impact of IC on market value of firm hence concluded that the dissimilarity in market and book worth is due to market inefficiency. Positive and significant relationship has been found between return on equity and human capital; also, positive significant relationship has been found between structural capital and return on equity concluding that IC has influence on financial performance of non-financial firms listed on PSE.