Measurement Model of Corporate Value Using Intellectual Capital and Corporate Governance

Abstract

The corporate value was generally measured by the tangible assets or the book value of companies in the past. Nowadays numerous corporations have utilized intellectual capital as their competitive advantages to create corporate value. Thus traditional accounting is unable to appraise the accurate corporate value created by intellectual capital. Therefore, the topics related to the evaluations of intellectual capital have recently become the focus for academic research and practical application. Some previous research shows corporate governance can also influence corporate value. However, most relevant research has not yet considered the variables of corporate governance into the analysis of intellectual capital and corporate value while building the evaluation model. And this can lead to some bias of the research outcome. Consequently, it seems to be imperative to use intellectual capital as a measurement foundation by the perspective of corporate governance for increasing accuracy of the evaluation model of corporate value. This research attempts to construct a measurement model of corporate value forecast using the variables of intellectual capital and corporate governance as indicators based on the summarized literature review through the historical data of the Integrated Circuit (IC) industry in Taiwan. The study adopts regression models with two dependent variables including Tobin’s Q (Qt) and return on assets (ROA) as measures of corporate value. The results indicate that the regression model with ROA for corporate value is better than the one with Tobin's Q. And the regression model added corporate governance as an independent variable along with intellectual capital can have better forecast of corporate value. This study reveals the corporate value has significantly positive correlation with intellectual capital and corporate governance.