The Impact of Intellectual Capital Efficiency on Financial Performance and Market Value: Finance Sector Companies Listed on Colombo Stock Exchange

Abstract

The study aims to find how efficient intellectual capital is by comparing valuations and financial performances of listed companies on the Colombo Stock Exchange. This research follows a positivist approach to understanding this issue and employs a deductive method. The study includes the commercial banking sector of all financial institutions operating within Sri Lanka. 46 companies were selected for the sample. This sample is comprised of specified numbers from twenty-six licensed financial firms, ten listed commercial banks, and one listed specialized bank. The remaining are eight listed insurance companies and one special-purpose leasing company. All of which belong to the main board of the Colombo Stock Exchange; From 2017 to 2021, secondary data from annual institutional reports were used to focus on a certain domain. That was otherwise neglected by the previous researchers and scholars. Statistical observations that can be observed through observations are such as Mean, and standard deviation to perform multivariate linear regression analysis. The output of the study is analyzed according to different criteria to make sense and draw a conclusion from it. The results indicated that the effectiveness of structural assets is less than human assets and overall assets. This study revealed that the market value of financial institutions is not affected by the intellectual capital in Sri Lanka. There is more evidence that for financial growth to happen, intellectual abilities are the prime requisite in underdeveloped countries. Research gives a clear view of how it works. While new technologies have an impact on the value of intellectual capital, there is a need to understand potential outcomes.