Abstract
The study aims to determine the connection between intellectual capital (IC) and financial performance of the Jordanian industrial listed companies. The methodology uses regression models, the IC will be measured using the VAIC model (value-added intellectual coefficient), on the other hand, company performance will be measured using return on equity (ROE). The main model includes financial leverage as a control variable to study the leverage role in the association between IC and return on equity. The study also investigates the incremental information content for intellectual capital components in explaining the change in firm performance. In addition, the size effect is studied to show if the company’s size affects the link between ROE and IC. The sample for this study is 77 Jordanian industrial firms and 788 company-year observations during the period 2006–2020. The study results are as follows: Intellectual capital has an important influence on industrial firm performance; Intellectual capital components have a significant impact on industrial firm performance. In particular, human capital efficiency (HCE) and capital employed efficiency (CEE) have a positive influence on ROE, and structural Capital efficiency (SCE) has a negative impact on firm performance. Lastly, firm size has an effect on the relationship between IC and industrial company performance.
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