The Influence of Intellectual Capital on the Company's Financial Performance and Market Value

Siti Ridloah,Irene Rini Demi Pangestuti,Pipit Indriyani,Anindya Ardiansari

doi:10.13189/ujaf.2021.090211

Abstract

The development of property and real estate companies in Indonesia is expanding. Property and real estate companies have great opportunities to further develop their companies. However, an increase in intellectual capital investment does not affect financial performance and market value. Therefore, this study aims to examine the effect of intellectual capital on financial performance and the market value of the property and real estate companies in Indonesia from 2014 to 2018. The population of this research is 56 property and real estate companies listed on the Indonesia Stock Exchange (IDX) from 2014 to 2018, then the sampling technique used is purposive sampling which results in 42 companies being studied with 210 observations. This study uses independent variables, namely Value Added Capital Employed, Value Added Human Capital, and Structural Capital Value Added as a representation of intellectual capital. The dependent variables in this study are financial performance and market value. The data analysis technique used is multiple linear regression. The results show that simultaneously intellectual capital has an effect on financial performance, but it has no significant effect on market value. Partially, only structural capital has a positive and significant effect on the company's financial performance. This study has limitations, namely, the results show that the level of influence of intellectual capital on financial performance and market value is low. Therefore, it is suggested that further research should include other variables such as corporate social responsibility and good corporate governance.

Highlights

In the era of globalization which is increasingly advanced with the increasing use of technology, companies need to create the right strategy
This study aims to examine the effect of intellectual capital on the financial performance and market value of the property and real estate companies for the period 2014-2018
Based on the research results, it can be concluded that the value-added generated through capital employed (VACA) and human capital (VAHU) has no effect on financial performance (ROE)

Summary

Introduction

In the era of globalization which is increasingly advanced with the increasing use of technology, companies need to create the right strategy. Maximum management of knowledge resources will affect investors' views on the company, thereby affecting the overall market value. This will have an impact on financial performance [2]. The company's financial performance is a factor considered by investors in investing [4]. Good financial performance will attract investors to invest. Financial statements are used as a measurement of financial performance. Financial statements contain a variety of important information including market share, business information, company prospectus, and others [5]. An analysis tool is needed, namely financial ratios to measure it [6]. Several financial ratios have been put forward by experts, but this study uses a profitability ratio, namely return on equity (ROE) [5]

Objectives

Methods

Results

Conclusion