Investment In Intellectual Capital Research Articles

Intellectual capital and firm risk: evidence from an emerging economy

Purpose Intellectual capital (IC) plays a pivotal role in determining corporate risk profiles in the contemporary knowledge era. Consequently, this study aims to analyze the impact of IC on firm risk (FR) among the manufacturing companies listed on the Pakistan Stock Exchange (PSX). Design/methodology/approach The authors have adopted the modified value-added intellectual model which combines human capital efficiency, structural capital efficiency, efficiency of capital employed and relational capital efficiency. FR has been used as the dependent variable, measured as the standard deviation of the daily stock prices. The study has used panel data from a sample of 40 manufacturing companies listed in the KSE-100 Index from 2015 to 2021. Findings The results suggest that IC has a significant impact on the FR of manufacturing companies listed on the benchmark index of PSX. Moreover, this relationship is direct; thus, an increase in IC would also increase FR measured by the change in stock prices. Research limitations/implications The current study has only used linear techniques. Future researchers may consider investigating the impact of IC at varying levels of FR using nonlinear techniques. Practical implications This study provides corporate managers and policymakers valuable insight into the need to strike a balance between investment in IC and their FR, particularly in an emerging market context. Originality/value IC is frequently associated with firm performance. However, the relationship between IC and FR has generally been underexplored. This study adds to the strand of limited IC literature by investigating the impact of a modified IC model on FR in an emerging economy.

Unraveling the Dynamics of Intellectual Capital, Firm Performance, and the Influential Moderators—BIG4 Auditors and Group Affiliation

The importance of intellectual capital (IC) in past decades unfolds several dimensions of firm performance (FP). Still, the contradictory and inconclusive relationship between IC and FP in the literature motivates the researchers to explore further and understand the empirical connection using both linear and curvilinear approaches. Using the fixed-effect panel regression models on a sample of 795 non-financial firms of India from the financial years 2004–2005 to 2020–2021, this study reveals that, undoubtedly, the IC enhances the FP up to a certain threshold, and with any marginal investment, IC reduces the FP by forming the inverted U-shaped curve. Interestingly, the presence of BIG4 auditors in Indian firms helps to increase the FP with the help of IC, even for the group-affiliated firms. Thus, this study aligns with both value creation and cost concern perspectives and implies that management and regulatory bodies may adopt a balanced approach while enhancing the FP through IC, as the result suggests that investment in IC will not endlessly improve the FP in the Indian context.

Intellectual capital and asset quality: A nonlinear investigation in the Turkish Banking sector

This study aims to investigate the intricate relationship between intellectual capital and asset quality within the context of the Turkish banking sector to determine the optimal level of intellectual capital investment that can enhance the asset quality of deposit banks. The study relies on panel data regression analysis to explore this complex relationship, and its dataset encompasses 22 deposit banks over 17 years, from 2005 to 2021. The study provides compelling evidence of a nonlinear relationship between intellectual capital and asset quality. It pinpoints an optimal threshold for intellectual capital investments, beyond which further increases can erode asset quality. Furthermore, the study identifies specific intellectual capital components that impact the asset quality of state-owned, privately owned, and foreign deposit banks differently. The findings indicate that optimizing human capital efficiency and capital employed efficiency is critical for enhancing the asset quality of deposit banks. In contrast, the significance of structural and relational capital efficiency may vary, demanding a careful balance of investment strategies.

The Effect of Compliance with Corporate Governance Principles on Intellectual Capital Investments

Purpose –The purpose of the study is to research whether the level of compliance with corporate governance principles affects intellectual capital investments.Design/methodology/approach –In this study, the connection between the degree of conformity with corporate governance principles and intellectual capital investments for 21 companies in the BIST Corporate Governance Index (Borsa Istanbul XKURY) was tested, utilizing the Generalized Moments Method (GMM), one of the panel data analysis methods. Constituting the dependent variable of the study intellectual capital investments were calculated with the VAICTM(Value Added Intellectual Coefficient) method developed by Ante Pulic.Findings –At the stage of determining the degree of conformity with corporate governance principles, which is the independent variable, it was observed there was no unity in the variables used, and the grades of conformity with corporate governance principles were accepted as an objective measurement unit and used as a measurement variable. As a result of the findings, it was concluded that the degree of conformity with corporate governance principles positively affects intellectual capital investments.Discussion –In conclusion, it can be said that corporate governance practices are truly related to intellectual capital, boost the efficiency of intellectual capital, and that corporate governance practices are a hidden force that improve the capability of businesses to captivate more intellectual capital

Firm-level political risk and intellectual capital investment: Does managerial ability matter?

This paper examines the impacts of firm-level political risks on intellectual capital investment decisions and how managerial ability adjusts this relationship. Using a broad sample of U.S firms from 2002 to 2021, our results show that firms with higher political risks reduce their investment in intellectual capital. This impact is more prominent for high-tech firms and firms with high financial distress, external financial dependence, and lower institutional ownership. Further, we find supportive evidence that managerial ability can prevent a substantial dimension (around 20%–40%) of the destructive impact of political risk on intellectual capital investment, which is also driven by firm-specific characteristics. These findings hold after a battery of robustness tests.

Intellectual Capital Investment and Corporate Sustainability Growth: An Empirical Evidence on Listed Firms in Nigeria

The study examined the relationship between intellectual capital investment and corporate sustainability growth. Intellectual capital investment was proxy using human capital investment (HCI), relational capital investment (RCI) and structural capital investment (SCI) while corporate sustainability growth was measured using corporate sustainability growth rate (CSGR). Ex post facto design was adopted and data for this study was collected from the annual reports and accounts of the selected industrial goods firms listed on the floors of Nigerian Exchange Group (NGX) for the period of 2016-2022. Panel Least squares model was used in the data analysis and the results of the study show a significant and positive relationship between human capital investment, relational capital investment, structural capital investment and sustainability growth of industrial goods firms in Nigeria at 1% significant level. The study therefore concludes that intellectual capital investment ensures corporate sustainability growth. Thus, the study recommends that manufacturing firms in Nigeria should improve on human capital investment as any negative changes in human capital investment will impact the sustainable growth of the firm. They should also invest on relational and structural capital as it can improve their competitiveness and bottom line

Pengaruh Intellectual Capital Disclosure, Keputusan Investasi, Struktur Modal, dan Kebijakan Dividen terhadap Nilai Perusahaan

The purpose of this research is to see the effect of Intellectual Capital Disclosure, Investment Decisions, Capital Structure, and Dividend Policy on Firm Value. The population in this study are food and beverage manufacturing companies listed on the Indonesia Stock Exchange for the 2018-2020 period. This study used a purposive sampling method and obtained 17 sample companies. This study uses multiple linear regression analysis method which is processed using the IBM SPSS Statistics 26 application. The results of this study indicate that disclosure of intellectual capital has no effect on firm value. investment decisions have a positive effect on firm value. Capital structure has a negative effect on firm value. Dividend policy has a positive effect on firm value.

Intellectual capital and performance of listed firms during the global financial crisis: the effects of legal origin

PurposeThis study aims to reveal to what extent successful European listed firms depend on their intellectual capital investment in achieving business success during the global financial crisis.Design/methodology/approachThis study used value added intellectual coefficient (VAIC) methodology to measure the effect of intellectual capital on financial performance of business, which consist of 683 the sample listed firms. To examine the nexus between intellectual capital, legal origin and firm performance, estimated panel test and ordinary least squares regression model is used to data obtained from a sample of European countries.FindingsThe finding of this study suggests that there exists a positive relationship between intellectual capital and firm performance with return on assets (ROA) before the financial crisis, while firm performance with return on equity did not contribute to intellectual capital before and after the crisis period. Additionally, common law countries have a positive and statistically significant impact on firm performance with ROA for the before-crisis period, while code law countries have positively significant effect with VAIC on ROA.Practical implicationsThe VAIC method has played a critical role in the management decision-making process to integrate the intellectual capital in the financial crisis period.Originality/valueThis study examines intellectual capital components such as human capital, structural capital and process capital efficiencies and firm performance in the legal origin context. The empirical evidence shows that there are significant impacts of legal origin on the nexus between intellectual capital and performance of listed firms during the global financial crisis.

The ripple effects of offshoring in the United States: Boosting local productivity and capital investment.

We investigate the offshoring effect on local productivity, physical and intellectual capital investment at the U.S. county level from 1999 to 2006. By using regression with fixed effects and instrumental variable to account for possible endogeneity, we find that offshoring can increase overall local productivity and capital investment. Through industry linkages, an increase in productivity and capital investment from offshoring enhances those increases in non-offshoring industries. Industries in both MSA (urban) and non-MSA (rural) counties receive benefits of productivity expansion and capital investment from offshoring. The increased capital investment from offshoring could be a channel of local productivity and capital investment expansion.

Effect of Green Intellectual Capital Practices on the Competitive Advantage of Companies: Evidence from Polish Companies

The purpose of this research was to determine the impact of Green Intellectual Capital practices on the competitive advantages of companies in Poland. The study included 150 Polish producing enterprises located across Poland. The first stage of the analysis was an assessment of the level of impact of GIC practices on the competitiveness of the studied organizations with the use of the 5-point Likert scale. The second stage involved an investigation into the correlation between the rating of the impact of GIC practices and their implementation on the basis of the Spearman’s rank correlation coefficient and the regression function. In the course of this research, it was determined that GIC practices had an impact on the competitiveness of organizations and that the impact varied according to the GIC component. Polish managers hold that the major impact was attributed to Green Organizational Capital. The impact of the component was rated at 2.4 on the adopted 5-point scale. In turn, the impact of Green Human Capital and Green Relational Capital was only 2.1. The identification of the correlation between GIC practices and the competitiveness of organizations provides an opportunity for the managers to better understand how companies can achieve a competitive advantage through investment in green intellectual capital. The research findings may, therefore, generate increased interest in GIC development in companies.

The Relationship between Intellectual Capital and Audit Fees

The present study investigates whether intellectual capital (IC) is related to audit fees and financial statement restatements in companies listed on the Iraq Stock Exchange (ISE). The present study is a pioneer investigation of this topic in emerging markets. Using a sample of all listed companies on the ISE from 2014 to 2020, the research hypotheses are tested with multiple regression based on panel data and the fixed-effects model. The results demonstrate that intellectual capital is positively and significantly related to normal and abnormal audit fees. Moreover, findings indicate direct and significant relationships between intellectual capital components and normal and abnormal audit fees. This means investment in IC components is likely to determine the auditors’ evaluation of a given client’s riskiness. Thus, an efficient IC investment level might be considered a key factor that companies are expected to consider. The findings of this study provide valuable implications for users of financial statements, analysts, and policymakers with information regarding IC, risk determinants, and audit fees. Policymakers can improve market efficiency by implementing regulations that foster IC disclosure as a risk-determinant factor.

Intellectual capital and firm performance: the moderating effect of controlling shareholders in Malaysia

This study examines: 1) how intellectual capital (IC) investment nonlinearly affects firm performance; 2) how controlling shareholders moderate the nonlinear association between IC investment and firm performance. This study utilises the value-added intellectual coefficient to proxy for the efficiencies of IC and its components, namely, human capital, structural capital and capital employed. Panel regression analysis is conducted utilising data from 733 Malaysian public listed companies for the period 2009-2018. The positive effects of intangible components of IC investments vanish after a certain optimal breakpoint. Regression results also indicate that controlling shareholders moderate the nonlinear impacts of IC and component investment on firm performance except for human capital efficiency. This study is the first to examine the role of controlling shareholders in moderating the relationship between IC investment and firm performance with a joint investigation of controlling shareholders, IC, and firm performance.

Intellectual Capital Investment and Business Sustainability of Deposit Money Banks in Nigeria

There have been a lot of studies on listed Deposit banks in Nigeria, however, the focus on banks’ performance has mostly been on the short term with an emphasis on profitability and returns. Limited work has been done on Intellectual capital and firms’ long-term performance, particularly Business sustainability. This study, therefore, examines the effect of Intellectual capital investment on the Business sustainability of Listed deposit banks in Nigeria. The investigation employed an ex-post facto design with a sample size of twelve deposit money institutions. The analysis utilised secondary data obtained from the Nigerian Exchange Group. The random effect regression analysis technique was used to analyse the data. The dependent variable is Business sustainability which was computed as Strategic growth rate (SGR) while the independent variables are Intellectual Capital computed as Intellectual capital efficiency), and Structural capital efficiency (SCE).

ІНВЕСТУВАННЯ ІНТЕЛЕКТУАЛЬНОГО КАПІТАЛУ В ІННОВАЦІЙНИЙ РОЗВИТОК ПІДПРИЄМСТВА

The article deals with current issues of intellectual capital investment in enterprise development, management practices and performance evaluation of investment of intellectual capital. The concept apparatus of the category "intellectual capital" is analyzed. Appointed to understand the holdings as tangible and intangible resources, which cannot be liquidity and formal registration of power. It is suggested to look at the structure of the intellectual capital of business in terms of specific elements, among them: human assets, market assets and assets, as well as structural assets and assets. In the following, a scheme for the formation and investment of intellectual capital of business is presented. It is proposed to attribute the efficiency of investment to intellectual capital in terms of commercialization of created innovative products, or additional income, taken away by the company after the implementation of projects for a variety of developments. The article defines that the effectiveness of intellectual capital investments cannot be considered only from the point of view of the obtained financial return due to the heterogeneity of its structure, therefore, an additional set of criteria for evaluating the effectiveness of intellectual capital management of the enterprise is highlighted, since the level of effectiveness of intellectual capital management will definitely affect the quality of innovative development of the enterprise. The author proposed to include the following as such criteria: criteria of financial security of the cycle of reproduction of intellectual potential with its subsequent transformation into intellectual capital, such criteria will allow to determine the degree of participation of the company's financial resources in the reproduction of intellectual potential; criteria for the quality of reproduction of the fixed capital, which allow to determine the level of technical and technological reproduction of the fixed capital; production sustainability criteria determined by the level of available innovation opportunities; criteria of socio-economic growth of the enterprise.

Intellectual Capital and Bank Profitability: Evidence from Serbia

Research Question: This paper examines how investing in Intellectual Capital (IC) influences bank profitability measured by return on average assets and return on average equity. Motivation: IC is a source of non-physical (added) value for innovative companies in the knowledge-based economy. In finance and banking, efficient use of IC is critical since a bank's capacity to supply high-quality services is based on its investment in IC. As a result, our goal was to throw light on the components of IC and examine how they relate to the commercial bank's financial performance in Serbia. Idea: The main idea behind this paper is to assess the relationship between components of IC and bank profitability. We used the three most common components: Human Capital Efficiency (HCE), Capital Employed Efficiency (CEE), and Structural Capital Efficiency (SCE), as well as control variables such as banks' size and leverage. Data: We used a Bankscope data set that included 27 Serbian commercial banks from 2011 to 2019, with 212 observations. Tools: We used Breusch–Pagan Lagrange multiplier and the Pesaran test to examine cross-section dependence. Based on the test results, we used the system generalized method of moments (GMM) to assess the relationship between IC components and bank profitability. Findings: In Serbian banking industry, both HCE and CEE considerably impact bank profitability. However, we couldn't find evidence that SCE contributes to bank profitability. Contribution: This paper adds to the existing literature on the relationship between IC and bank profitability. However, it also includes a policy recommendation for bank executives as we discovered that investing in IC can positively influence bank profitability.

Development of Risk Management Mechanism and the System of Risk Metrics to Evaluate and Enhance the Long-Term Orientation of the Strategies of Non-Financial Companies

Companies that are performing innovation-focused strategies or experiencing digital transformation are exposed to significant long-term risks. The untimely and inefficient management of these risks leads to the destruction of the company’s value and calls into question its survival. This is often underpinned by companies following strategic management with a short-term horizon. Such “strategic myopia” prevents timely identification and treatment of strategic risks and destroys value due to physical and intellectual capital investment restrictions. However, the existing mechanisms of setting up risk management architecture neither addresses the lengths of the horizon and the alignment of the horizon with the strategic objectives, state of the environment and stakeholder expectations nor provides the tools for evaluating the horizon of the firm’s strategy. Moreover, existing systems of evaluating short-termism rely only on financial and governance metrics and do not address environmental and social factors. We closed these gaps and developed a strategic risk-controlling mechanisms to set up the risk management architecture that expanded “conventional” risk management analysis and addressed the “strategic myopia”. We also worked out the critical tool of the mechanism—the system of key risk metrics (SKRI) aimed at assessing the degree of a company’s following of long-term strategic orientation. Finally, we tested it on a sample of Russian non-financial companies. Testing results revealed a strong and positive correlation between the management’s decision to follow a long-term strategic focus and the growth of companies’ long-term value (measured by economic value added (EVA)). SKRI can be utilized in strategic risk controlling to assess the company’s propensity to follow a short-term horizon, evaluate its ability to maintain sustainable value creation, and develop recommendations to stakeholders to expand its strategic focus.

Effective Risk Management and Sustainable Corporate Performance Integrating Innovation and Intellectual Capital: An Application on Istanbul Exchange Market

Risk management requires firms to mitigate the negative consequences of market dynamics on their performance outcomes. Traditional risk management solely addresses the threats and negative consequences of risk. However, total (effective) risk management is capable of regulating out-of-control market conditions to boost corporate performance by restraining market volatility and hence providing return sustainability considering the opportunities of risk as well. Based on a sample of 286 firm-year observations drawn from 26 firms listed on Borsa Istanbul, BIST-50 index, the empirical study examines the association between total risk management and firm performance and the moderating role of innovation, intellectual capital, and the pandemic period for the years 2011–2021. The analysis is performed by applying the hierarchical panel regression using ROE and ROI as proxies to measure firm performance. The results have shown that there is a positive association between total risk management and performance measures, especially among firms applying more innovation and intellectual capital investments. However, the effect of innovation on the performance relationship of total risk management (ROE) was found to be negative surprisingly. Moreover, results suggest that total risk management has a lower positive association with firm performance during the pandemic period for both performance measures.

The Relationships Between National Intellectual Capital and Foreign Direct Investment

Foreign direct investment (FDI) has a significant influence on economic development, productivity and competitiveness in host countries. Policymakers are eager to attract FDI. With the importance of the knowledge economy, intellectual capital becomes a critical determinant of FDI location choice. Thus, the study tries to understand the relationships between national intellectual capital (NIC) and FDI in host countries and to compare the differences between developed countries and developing countries. The study hypothesizes that each component of NIC (human capital, market capital, process capital, renewal capital and financial capital) is positively related to FDI. Moreover, in developed countries, human capital and renewal capital has more influence on FDI while in developing countries, market capital and process capital have more influence on FDI.
 The study uses data from United Nations Conference on Trade and Development (UNCTAD) and Taiwan Intellectual Capital Research Center (TICRC). Because of data availability, the sample needs to be both included in the database of UNCTAD and TICRC during 2001 to 2018. The final sample consists of 59 countries which extends over the five continents. The study proceeds by using panel data, pooling 56 countries for the period from 2001 to 2019 after the Hausman test to determine whether there are fixed effects or random effects. A generalized least square (GLS) model is used to test the hypotheses with country-year data for FDI analysis.
 The results confirm that each dimension of NIC is positively related to inward FDI, indicating to the importance of NIC to attract inward FDI. In addition, national market capital, national process capital and national renewal capital have more influence on inward FDI in developing countries than in developed countries. Conclusions and practical suggestions are also provided.

INTELLECTUAL CAPITAL AND FIRM PERFORMANCE OF LISTED FIRMS IN NIGERIA: MODERATING ROLE OF CORPORATE GOVERNANCE

The low performance of Nigerian firms despite investment in intellectual capital is a major concern. While studies have shown that corporate governance practices strengthens the subsisting relationship between investment in intellectual capital and performance in the developed economies, this moderating effect in Nigeria is yet to be adequately explored as research focus is limited to possible effects of intellectual capital and performance. It is against this background, this study investigated the moderating role of corporate governance on the relationship between intellectual capital and performance of listed non-financial companies in Nigeria. The study adopted ex-post facto research design, and data were drawn from the audited annual reports of fifty (50) listed non-financial firms for a period of 2007 to 2017. Multiple regression techniques were employed to test the relationship among the variables. The results of the study revealed that both intellectual capital and corporate governance drive financial performance as the relationship is found significant in all components. The study concluded that corporate governance moderated the effect of investment in intellectual capital on financial performance. The study recommends that Board of directors should adopt measurable corporate governance mechanism which strengthens and helps in investment strategy that increases and improves performance. Also, there is need to entrench corporate governance as a control strategy and impetus towards attaining organization’s goals.

The Effect of Intellectual Capital Investment, Corporate Governance, and Barriers to Entry on the Intellectual Capital Performance of Banking Companies

Intellectual capital is an important element in determining the performance of banking companies. This study aimed to examine the effect of intellectual capital investment, good corporate governance (proxied by foreign ownership and institutional ownership), and barriers to entry on intellectual capital performance. This research was conducted on conventional banking companies listed on the Indonesia Stock Exchange from 2015 to 2019. The sample was selected using a purposive sampling method based on specific criteria. Eighty-nine banking companies met the criteria. Data analysis was performed using multiple linear regression analysis. The results of this study indicate that intellectual capital investment and barriers to entry have a negative effect on intellectual capital performance. On the other hand, foreign ownership and institutional ownership have no significant effect on intellectual capital performance. These findings recommend that banking companies pay attention to efficiency in investment in human resource development to improve bank performance. Inefficient investment in human resources can lead to a decrease in intellectual capital performance. Banking companies also need to continuously innovate service products to maintain their competitiveness and no longer rely on fixed asset investment as an element of a barrier to entry.