MEASUREMENT OF HUMAN CAPITAL AND MARKET VALUE OF LISTED COMPANIES

Abstract

1.IntroductionMany companies recognize that the gap between the market value and the book value becomes more significant. The market value exceeds the book value, and the value of the capital invested in the company exceeds the costs of assets replacement. Only 20 years ago global companies had their market value at a level similar to the value of their countable assets, which corresponded to the Tobin's Q indicator of around 1 (Jarugowa and Fijalkowska, 2002). Currently in the leading companies, such as Microsoft, the Tobin's Q indicator is around 2, which means that 100% of the company's market value is made of uncountable assets that include, among others, the intellectual capital and related to the human capital [1]. Hence, the intellectual capital constitutes a significant element of the company's market value, and due to this its position should be calculated and presented as an indicator of the total value of a company. Information arising from the intellectual capital measurement can encourage investors to future investment and play a crucial role in forming the market value of a company.The author attempted to indicate the connection between the increasing market value of the largest companies and a need for measuring the intellectual and human capital. At the same time pointed out that there are still difficulties associated with the measurement of human capital. Regardless of these difficulties, more and more companies measure of human capital. Results of own research confirmed this and showed of measurement range in Polish listed companies. In order to obtain the data used indirect survey. Survey conducted in 50 Polish listed companies in the period September 2015-February 2016. The rest of the paper shows specific examples of using information regarding human capital to predict and create the company's market value.2.A gap between the market value and the book value of companies as a stimulus for the intellectual capital measurementTwo indicators are most often used to estimate the company's intellectual capital: indicator of relations between the market value and the book value MV/ BV and Tobin's Q indicator. Both of them give opportunity to estimate the intellectual capital of any company, to track changes in its value or to compare its value to the value of any other company. D. Appenzeller observed that those indicators have significant limitations for example the company's market value depends on many factors such as: financial condition, intellectual capital or a situation on the market. Thus, in bull market period, when share prices are rising, a high level of both indicators can be expected, and it does not have to be an evidence for high level of intellectual capital. While in a bear market periods, the company's market value - and as a result its intellectual capital - will be reduced (Appenzeller, 2009). Table 1 shows the market value and the assets value of the largest global companies in 2016. The discrepancy between the market value and book value is also noted by the Polish companies, e.g. LPP (5.4), CCC (7.8), PKN Orlen (1.5) [2]. Table 2 shows the market value and book value of the largest companies listed on Warsaw Stock Exchange.Despite a wide range of literature, there is still lack one definition of the intellectual capital term. According to L. Edvinsson the intellectual capital is a difference between the market value and the book value of an organization, in other words it is a sum of hidden assets, not included in the company's balance sheet (Edvinsson and Sullivan, 1996). The concept of L. Edvinsson shows two basic elements of the intellectual capital, that is human capital and structural capital. The human capital includes the knowledge, skills, experience, attitude (e.g. dedication, ability to learn, will to share the knowledge and ideas, etc.). The structural capital is an ability to support the employees' efficiency by the organisation. It includes the tools and systems assisting the transfer of knowledge (organizational capital) and relations with clients (client capital) (Mouritsen and Larsen, 2001). …