Examining the Intellectual Capital Impact on the Profit Efficiency in Automobile and Parts Manufacturing Industry of Tehran Stock Exchange

Safdar Alipour

doi:10.11648/j.jfa.20170503.14

Abstract

The objecdetive of this research is to study the impact of intellectual capital (IC) and its components on profit efficiency as a comprehensive criterion of financial performance. this research utilizes Pulic model in order to measure the IC of 23 companies in automobile and parts manufacturing industry of Tehran stock exchange for the period of 2011-2014. It also uses DEA technique and truncated regression in order to calculate profit efficiency and examine its relationship with IC respectively. the results indicated that human capital efficiency (HCE), capital employed efficiency (CEE), and value added intellectual capital (VAIC<sup>TM</sup>) affect significantly and positively performance (profit efficiency) but Structural capital efficiency (SCE) is not associated significantly with performance. Among IC components, the human capital has the most impact on performance. Therefore, it can be asserted that, in automobile and parts industry, IC is capable of having effective role in financial decisions.

Highlights

In the mid-20th century, financial economics attempted to pull attention towards company's new approach to business
In this research, utilizing information relating to operational section of income statement and fixed assets of balance sheet, that have clues for business performance and have high comparability among companies from a same industry, the profit efficiency as a single and comprehensive measure has been calculated
The results are in accordance with the most of studies already done on the intellectual capital (IC) effect on performance

Summary

Introduction

In the mid-20th century, financial economics attempted to pull attention towards company's new approach to business. This approach was based on the fundamental presumption that every organization has the capabilities, assets and other financial resources unique and distinct from other organizations and is a source of self-cured value and wealth creation. Intellectual capital is seen as an integral part of the workings of most modern organizations. The exploitation of this complex phenomenon can be the difference between the death and survival of an organization. It is critical that a clear understanding of this concept exists within the managerial strata of any organization, with clear comprehension of the component elements of IC are and how it can be harnessed for the perusal of the organizational objectives [2]

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Conclusion