Abstract

 
 
 This study aims to find the effect of Intellectual Capital Disclosure (ICD) and Corporate Governance (CG) on firm performance in ASEAN countries. Firm performance is divided into accounting-based performance and market-based performance. The accounting-based performance consists of Non-Discretionary Net Income (NDNI) and Cash Flow Operations (CFO), while market-based performance consists of Tobin’s Q and Market-to-Book Ratio (MBR). The measurement of ICD components uses a scoring system. The sample of this research is 112 firms in the industrial technology listed in the stock exchange of ASEAN-5 between 2011 and 2018. This study finds that NDNI increases when firms increase RCD quality. No ICD components are capable of affecting CFO. On the other hand, SCD is a variable that decreases NDNI value. BGEN is found to reduce NDNI and CFO values. RCD is also the only ICD component that can increase market-based performance, especially MBR. HCD consistently lowers the values of MBR and Tobin’s Q. BSIZE holds a significant role in raising Tobin’s Q score, and BGEN lowers MBR instead. BIND has no part in the market-based performance, but it significantly lowers NDNI value. This study adds another view to ICD’s benefits from two firm performance perspectives, accounting-based performance and market-based performance, especially in ASEAN-5.
 
 
Highlights
Investment in Intellectual Capital (IC) is currently seen as the leading value creator for firms and economy sectors (Zéghal, 2015) and may positively influence investment decisions and firm value (Yang, 2018)
This might be because the sample used in Indonesia consisted of only 3 companies and all of them had done the Intellectual Capital Disclosure (ICD) well
The lowest yield is owned by Philippines, which is 0.18, this is because the Philippines sample only consists of 1 company, so there is no other comparison to evenly distribute ICD results in Philippine companies
Summary
Investment in Intellectual Capital (IC) is currently seen as the leading value creator for firms and economy sectors (Zéghal, 2015) and may positively influence investment decisions and firm value (Yang, 2018). IC is the knowledge, information, and practical experience which can be used to generate wealth for firms and become the foundation for competitiveness and is acknowledged as an essential asset to business performance (Cabrita et al, 2017). There is no official standard that regulates Intellectual Capital Disclosure (ICD) (Schiemann et al, 2015; Guthrie, 2017; Hatane et al, 2019). Components of ICD can’t act individually, but the interaction between them can generate value for the company. Changing business environment needs to create creative and innovative plans to increase competitiveness and sustain in the market places, so that is why companies need to evaluate ICD and its components develop its performance (Simion & Tobă, 2018). With the systematic ICD, the information can reduce bias towards corporation value and provide information for investors regarding anticipation of uncertainty in the future and help measure corporate value (Hatane et al, 2019)
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