Structural Capital Efficiency 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.

FAKTOR – FAKTOR YANG MEMENGARUHI FINANCIAL PERFORMANCE PADA PERUSAHAAN MANUFAKTUR DI INDONESIA

The purpose of this study was to obtain empirical evidence regarding the effect of independent variables which are human capital efficiency, structural capital efficiency, capital employed efficiency, firm size, and capital structure on the dependent variable, financial performance in manufacturing companies in Indonesia. The sample on this study is limited on manufacturing companies listed on the Indonesia Stock Exchange during the year 2017-2020. This study uses purposive sampling method to collect data and EViews 12 for data processing. The results of this study conclude that human capital efficiency and capital employed efficiency have a positive influence on financial performance, while structural capital efficiency, firm size, and capital structure efficiency have no effect on financial performance.

Understanding the Impact of Intellectual Capital on Financial Performance and Its Impact on Firm Value: A Literature Review

This research aims to find out whether intellectual capital can influence financial performance, thereby, impacting company value using the journal review method. Research journals containing the variables of intellectual capital, financial performance, and company value were used. The results of the research show that there is a relationship between intellectual capital and financial performance and its influence on company value through three components contained in intellectual capital: human capital efficiency (HCE), structural capital efficiency (SCE), and capital efficiency used (CEE), including physical and financial capital. The contribution of intellectual capital to company performance will vary from one industry to another. Industries that rely on creativity and innovation will require a higher level of intellectual capital. The results of this research conclude that the existence of intellectual capital within the company is an important company asset. Companies that can manage their intellectual capital effectively will have better financial performance and higher company value. Intellectual capital can influence financial performance and company value.
 Keywords: intellectual capital, financial performance, company value

Pengaruh Intellectual Capital terhadap Kinerja Keuangan pada Bank Syariah di Malaysia Tahun 2019-2022

This study aims to investigate the effect of Intellectual Capital on the financial performance of Islamic banks in Malaysia during the period 2019-2022. This research method uses a quantitative approach by collecting data from the annual financial statements of Islamic banks in Malaysia during the study period. Intellectual Capital is measured by Capital Employed Efficiency, Human Capital Efficiency and Structural Capital Efficiency. Financial performance is measured by ROA (Return on Assets). The data analysis technique uses Partial Least Square (PLS). The sample was selected based on purposive sampling and there were 13 Islamic Banks for 4 years. The results showed that intellectual capital has a positive and significant effect on financial performance. This finding indicates that the management and development of intellectual capital, such as efficient use of capital, improving employee skills, and strengthening organizational infrastructure, contribute positively to the financial performance of Islamic banks in Malaysia. The practical implication of this study is that the management of Islamic banks should pay special attention to the management of their intellectual capital as part of the strategy to improve ROA. Investment in intellectual capital development can generate long-term benefits for Islamic banks, especially in the face of intensifying competition in the banking industry.

Does Intellectual Capital Efficiency Translate in the Post-pandemic Era for Islamic Banks in Indonesia?

PURPOSE: This study aims to identify the key determinants of financial performance in Islamic banks, specifically focusing on the Financing to Deposit Ratio (FDR) and Capital Adequacy Ratio (CAR). Additionally, it explores the applicability of these determinants in a post-pandemic environment. DESIGN/METHODOLOGY/APPROACH: The research utilizes data from two prominent Indonesian Islamic banks, Bank Syariah Indonesia (BSI) and Bank Muamalah Indonesia (BMI), for the pre-pandemic period (2016-2020). Ordinary Least Squares (OLS) regression analysis is employed to investigate the influence of Human Capital Efficiency (HCE), Structural Capital Efficiency (SCE), and Capital Employed Efficiency (CEE) on both FDR and CAR. FINDINGS: The model analyzing determinants of FDR explains a significant portion (48.99%) of the variance. Interestingly, only Capital Employed Efficiency (CEE) exhibits a statistically significant negative relationship with FDR. Conversely, the model for CAR lacks a statistically significant fit. ORIGINALITY: This research contributes by examining the impact of intellectual capital components (HCE, SCE, CEE) on financial performance ratios (FDR, CAR) within the Indonesian Islamic banking context. RESEARCH LIMITATIONS: The study is limited to data from two Indonesian banks during a specific timeframe. Further research with a broader sample size and encompassing the post-pandemic era would enhance generalizability. PRACTICAL IMPLICATIONS: The findings offer valuable insights for stakeholders in Indonesian Islamic banking, particularly regarding the importance of efficient capital utilization for managing financing activities and maintaining healthy FDR levels. SOCIAL IMPLICATIONS: By enhancing the financial performance of Islamic banks, this research indirectly contributes to the development of a more robust Islamic financial system that caters to the ethical and social banking needs of the community.

Intellectual capital and financial performance: does board size and independent directors matter? An empirical enquiry

Purpose Intellectual capital (IC) is a paramount resource for competitiveness in the knowledge-based financial sectors of the economy. As financial technology advances, specifically in the banking industry, it is vital to understand the effect of IC on financial performance. This study aims to investigate the effect of IC on return on equity (ROE), with a unique emphasis on the moderating role of board attributes. Previous studies have overlooked this moderating role. Design/methodology/approach The study sample consists of 17 banks and a panel data set spanning 2016–2021, extracted from annual reports. Antel Pulic’s value-added intellectual coefficient (VAIC) model is used to compute IC. To analyze the data, a generalized least squares analysis is conducted. The robustness of the analysis is ensured by using the two-stage least squares (2SLS) econometric technique. Findings The findings indicate that both the VAIC and human capital efficiency (HCE) have a significant impact on the ROE of banks. In terms of moderation, it is observed that board size (BS) exerts a negative effect on the association between VAIC, HCE, structural capital efficiency and ROE. Additionally, BS positively compounds the connection between capital employed efficiency and ROE. Similarly, the presence of independent directors (IND) significantly moderates the effects of VAIC and its components on the ROE of banks in Pakistan. Practical implications Banks should focus on the HCE for a higher ROE. Moreover, banks ought to prioritize appointing more independent directors in the boardroom for effective utilization of IC and greater ROE. Originality/value The findings of the study, which analyzed data from Pakistan’s banking sector, are original and provide additional insights into the literature on IC and board attributes.

The impact of intellectual capital on company financial performance: Evidence from the Omani industrial sector

The article aims to investigate, using the VAIC and MVAIC models, the impact of intellectual capital on the financial performance of Omani companies listed on the Muscat Stock Exchange from 2017 to 2021. Regression analysis revealed a significant positive influence of VAIC and MVAIC only on the Asset Turnover Ratio at a 10% significance level. This suggests that an increase in VAIC or MVAIC by one unit could lead to a respective increase in earnings for Omani listed industrial companies by 0.0017 and 0.0016. However, the overall impact of VAIC and MVAIC on financial performance appears limited, necessitating measures for enhanced efficacy. Moreover, company size and leverage were found to significantly influence EBITDA and Return on Assets, suggesting the positive effect of increased activity and resource utilization. Conversely, Return on Customer Equity negatively affected only Asset Turnover Ratio, implying that investments in marketing and advertising may not significantly enhance financial performance. Human Capital Efficiency showed no significant impact on financial performance measures, highlighting the necessity for Omani industrial enterprises to focus on enhancing employee skills and experience for improved value-creation processes. These findings underscore the intricate relationship between intellectual, physical, and financial capital in shaping financial performance, necessitating targeted strategies for enhancement. Further analysis of suggested models indicated the significance of company size on EBITDA, highlighting the importance of scaling activities for performance improvement. VAIC and MVAIC structural elements showed mixed results, while Capital Employed Efficiency negatively affected Return on Equity, Structural Capital Efficiency positively impacted EBITDA and Asset Turnover Ratio.

Does intellectual capital efficiency improve islamic banking performance? The moderating effect of islamic governance

Research aims: This paper aims to examine the moderating effect of Islamic governance on the relationship between intellectual capital efficiency (ICE) and Islamic bank performance.Design/Methodology/Approach: The population for this study covered Islamic banks in Indonesia. Purposive sampling was performed, and statistical analysis was conducted using moderating regression analysis by selecting among the common, fixed, and random effects models. The statistical tool utilized was E-Views 12.Research findings: The primary finding of this study is related to the positive moderating effect of structural capital efficiency on the relationship between intellectual capital and Islamic banking performance. Furthermore, Islamic governance could not strengthen the influence of human capital efficiency and capital employed efficiency on the performance of Islamic banks.Theoretical contribution/Originality: To the best of the authors’ knowledge, no other research has examined whether intellectual capital significantly affects the performance of Islamic banks with a moderating effect on Islamic governance in Indonesia.Practitioner/Policy implication: The results of this research provide input for the Sharia Supervisory Board to pay attention to the management of intellectual capital in Islamic banks and encourage Islamic banks to increase the value of intangible resources, capabilities, and asset knowledge to create and maintain competitive advantages in Islamic banks.Research limitation/Implication: This study focused only on Indonesian Islamic banks; hence, future research should be extended to Islamic insurance and microfinance.

Intellectual capital and market performance of Nigerian Companies

This study is carried out on intellectual capital efficiency and the market value of Nigerian quoted companies. The specific objectives were to: determine the influence of human capital efficiency on market value of the listed Nigerian companies; examine the influence of structural capital efficiency on market value of the listed Nigerian companies; and evaluate the influence of capital employed efficiency on market of the listed Nigerian companies firms in Nigeria. The data were sourced from 2018 to 2022 annual audited accounts of the 117 companies quoted on the Nigerian Exchange Group. The regression technique was employed to analyse the data. The findings showed that capital employed efficiency positively influenced market value throughout the five years but the human capital efficiency and structural capital efficiency have mixed results. Human capital efficiency and structural capital efficiency were both positively and negatively influenced market value of the sampled Nigerian companies for the periods of observation. The study thus concluded that intellectual capital influenced the market value of the sampled Nigerian companies and provided the recommendation that the sampled companies should improve their investments on intellectual capital resources (such as staffs’ training, staff welfare) and physical assets.

Does intellectual capital efficiency measured by modified value-added intellectual coefficient affect the financial performance of insurance companies in Ethiopia?

Insurance company managers and shareholders should be conscious of the effect of intellectual capital efficiency and its components on financial performance. The purpose of this study is to examine the role of intellectual capital efficiency and its components on the financial performance of insurance companies. To achieve study objectives Modified value-added intellectual coefficient is adopted to measure the effect of intellectual capital efficiency. The study adopted an explanatory research design with an arrangement of secondary data analysis via document analysis, quantitative approach, and deductive method of inquiry. Panel data was used with a sample of 14 insurance companies from 2012-2022. Descriptive and regression analyses were performed to analyze the data using STATA version 15.0. Econometric model estimation procedures and multiple regression assumptions were tested accordingly. The random effect regression result revealed that the value-added intellectual capital and its component human capital and capital employed efficiency have a positive significance association with financial performance. Whereas, relational capital efficiency and structural capital efficiency do not have a significant contribution to the financial performance of insurance sectors in Ethiopia. The findings of this study contribute to the theoretical and practical understanding of the relationship between intellectual capital efficiency and financial performance in the context of insurance companies in Ethiopia.

Intellectual Capital and Corporate Sustainable Growth: An Empirical Study on Indian Agribusinesses specific to Pesticides and Fertilizer Companies

This study aims to evaluate the impact of Intellectual Capital on the Sustainable Growth Rate of Indian Agribusiness companies. Intellectual Capital plays a vital role in the global agriculture business. Data is collected from 17 Agribusiness companies engaged explicitly in pesticides and fertilizers between 2011 and 2022, using Prowessiq (CMIE) and financial reports. The Extended Value-Added Intellectual Capital (E-VAIC) model is employed to measure Intellectual Capital. The System Generalized Method of Moments (S-GMM) regression method is employed for data analysis. The results revealed that Innovation Capital Efficiency and Human Capital Efficiency are the most significant variables that affect the Sustainable Growth of Indian Agribusiness companies. The other Intellectual Capital variables, such as Relational Capital Efficiency and Structural Capital Efficiency, positively impact the Sustainable Growth Rate. The study concludes that Indian Agribusiness companies must recognize the importance of Intellectual Capital resources and invest in them to achieve long- term corporate growth.

Pengaruh HCE, SCE, CEE, Liquidity, dan Firm Size terhadap Firm Performance

The purpose of this research is to empirically prove the effect of the variable human capital efficiency (HCE), structural capital efficiency (SCE), capital employed efficiency (CEE), liquidity, dan firm size to the variable firm performance, using 84 manufacturing companies listed at the Indonesia Stock Exchange in 2017-2019. Data processing in this research using software program the Eviews version 12.0. The results of the research that have been carried out on the simultaneous test shows that bahwa human capital efficiency, structural capital efficiency, capital employed efficiency, liquidity, dan firm size have a significant simultaneous effect on firm performance, while the partial significance test shows that SCE and liquidity have a significant effect on CAR, but for HCE, CEE, and firm size have no significant effect on firm performance.

Does corporate governance spur bank intellectual capital in an emerging economy? A system GMM analysis from Ethiopia

PurposeThe current study aims to explore the impact of corporate governance (CG) mechanisms, as measured by board size, board meeting frequency, board gender diversity, number of board subcommittees, board remuneration, size of audit committee, and audit committee meeting frequency, on bank intellectual capital (as calculated by the modified value-added intellectual coefficient (M-VAIC) and its components (human capital efficiency (HCE), structural capital efficiency (SCE), and relational capital efficiency (SCE)).Design/methodology/approachPanel data is extracted from the financial and other internal reports of 14 commercial banks and the National Bank of Ethiopia for the period 2011–2022. A two-step system generalized method of moments (2SYS-GMM) was used to account for the unobserved endogeneity and heteroscedasticity problems.FindingsThe empirical findings suggest that board size and board meeting frequency have a negative and significant impact on all IC performance measures. Besides, audit committee size has a negative and significant effect on HCE, SCE, and M-VAIC of the banking industry in Ethiopia. Moreover, board remuneration has a significant positive relationship with IC efficiency (HCE, SCE, and M-VAIC). Also, audit committee meeting frequency has a positive and significant effect on the HCE of banks. However, board gender diversity and the number of board subcommittees have not made statistically significant contributions to IC performance.Research limitation/implicationThe study is limited in its use of seven dimensions of CG and future studies can use other alternative accounts for CG variables. Next, this study applies only to commercial banks; hence, future studies can include other financial as well as non-financial organizations such as insurance companies, microfinance institutions, manufacturing, and other sectors.Practical implicationsThis study contributes to helping the regulators and practitioners of the banking industry improve the existing standards and guidelines for CG practices to strengthen their IC performance. The findings may also give input for policymakers to integrate the intellectual capital in the decision-making process for policy formulation and implementation for the establishment of a robust banking sector.Originality/valueConsidering the modified value-added IC coefficient (M-VAIC) and 2SYS-GMM models, this research is the first study to analyze the relationships between CG and banks’ IC in Ethiopia.

Pengaruh Modal Intelektual terhadap Performa Perusahaan dengan Manajemen Keluarga sebagai Variabel Moderasi

This research uses family management as a moderating variable to explore the influence of intellectual capital determinants on firm performance. Intangible asset such as intellectual capital is very important in supporting firm performance. Intellectual capital with the Modified Intellectual Value Added Coefficient (MVAIC) model consists of Human Resource Efficiency (HCE), Structural Capital Efficiency (SCE), Capital Employed Efficiency (CEE), and Relational Capital Efficiency (RCE). The sample for this research is companies from all industries that are recorded on the Indonesia Stock Exchange (IDX) which is provide comprehensive company financial reports and annual reports for the 2018–2022 period. This research was applied using a quantitative approach method. Panel data regression and moderated regression analysis are the data analysis method used in this research. The findings of this research indicate that MVAIC has a significant positive effect on firm performance and family management does not moderate the relationship between intellectual capital and firm performance. The higher the intellectual capital assets owned by a company, the greater the company's performance.

THE COMPONENTS OF INTELLECTUAL CAPITAL THAT AFFECT FIRM PERFORMANCE IN STATE-OWNED COMPANIES

The purpose of this study is to examine the effect of independent variables of human capital efficiency (HCE), capital employed efficiency (CEE), and structural capital efficiency (SCE) on firm performance. This study uses firm size as a control variable. The sample in this study was selected using purposive sampling which resulted in 11 state-owned companies from 12 companies listed on the Indonesia Stock Exchange (IDX) during the 2019-2022 period were used as research objects. This study uses a panel data regression model with a Common Effect Model (CEM) approach using Eviews version 12 program. Based on the analysis, the results of this study shows that human capital efficiency (HCE), capital employed efficiency (CEE) and firm size have a positive and significant effect on firm performance, while structural capital employed (SCE) have an insignificant effect on firm performance. These findings also revealed that companies that can manage their assets including intangible assets will improve company performance.

Human Capital Efficiency, Free Cash Flow, Corporate Sustainability Performance and Internal Auditors

Corporate Sustainability Performance is linked to the company's business strategy, which aims to benefit stakeholders while improving people's lives and protecting the environment. This study aims to examine the effect of Intelectual Capital and Free Cash Flow on Corporate Sustainability Performance with Internal Auditors as the moderating variable in this research. Intellectual Capital is proxied by Human Capital Efficiency, Structural Capital Efficiency and Capital Employed Efficiency. Meanwhile, Corporate Sustainability Performance is proxied by the CSR index which is based on the 2016 Global Reporting Initiative Standard. The population of this study are companies included in the LQ45 Index during the 2017- 2021 period. The sample was selected using purposive sampling method and 20 companies were selected as the research sample. The results of this study indicate that Human Capital, have no significant effect on the Company's Sustainability Performance. Meanwhile, Free Cash Flow has a significant positive effect on the Company's Sustainability Performance. Internal auditors can weaken the relationship between Human Capital and Corporate Sustainability Performance, the relationship between Free Cash Flow and Corporate Sustainability Performance. Meanwhile, the Internal Auditor can strengthen the relationship between Capital Employed and Corporate Sustainability Performance. The results of this study have an impact on company management to consider the company performance and as information for investors in determining investment decisions.

The effect of human capital and structural capital on leverage: Evidence from Jordan

This study investigates the effect of human capital and structural capital on leverage for Jordanian industrial firms from 2006 to 2020. The relevance of this topic lies in the importance of capital structure decisions for firm value and the limited research conducted on the topic in Jordan. The aim is to examine whether human capital efficiency and structural capital efficiency significantly affect leverage. The sample includes 77 industrial firms. The study employs multiple regression analysis to test the hypotheses, controlling for variables such as return on equity and firm size. The findings show that structural capital efficiency does not significantly affect leverage, but human capital efficiency and ROE have significant effects. Furthermore, the study finds that the relationship between these variables differs between large and small companies. This implies that firms with more efficient human capital tend to use less debt financing. The study concludes that human and structural capital efficiency should be considered when making capital structure decisions, as they can affect the optimal level of debt financing. The practical value is the insights for firms in Jordan and other emerging markets on optimizing their capital structure decisions by considering their human and structural capital efficiency. These results contribute to the literature on firm performance determinants in emerging economies and offer valuable information for practitioners and policymakers. AcknowledgmentI want to thank Amman Arab University for funding this study.

Intellectual Capital Efficiency and Performance of Banks in India

The aim of this paper is to examine the impact of intellectual capital efficiency on the performance of commercial banks in India for twotime periods, viz. 2018-19 and 2020-21 representing the pre and post-merger periods. The IC efficiency (ICE) of the banks is measuredusing the standard Human Capital Efficiency (HCE), Structural Capital Efficiency (SCE). The performance is measured in terms ofReturn on Assets (ROA), Return on Equity (ROE), Net Interest Margin (NIM), and Return on Investments (ROI). The results show thatsub-components of IC have impacted the performance of banks variedly, but not consistently. The ICE of private sector banks hasincreased over the period of study. The impact of merger on the ICE performance of the individual public sector banks has been mixed,though on the average, there is no immediate statistically significant impact of the mergers on the ICE performance of all the public sectorbanks in India.Key words: Intellectual Capital Performance, Human Capital, Banking, Productivity, Profitability, Mergers

Intellectual Capital and Shareholders’ Wealth. The Economic Value Added Approach

The role of intangible assets such as intellectual capital promoting corporate competitiveness and further shareholders’ value has attracted attention in the finance literature. This study investigated intellectual capital efficiency as a source of creating shareholders’ wealth in Nigeria. To achieve the study's aim, correlational research design was adopted. The study’s data were collected from content analysis of financial statements of listed service companies in Nigeria. The sample used in this study includes 17 service firms listed on the Nigeria Exchange Group from 2011 to 2022. The VAIC model was utilized to estimate intellectual capital. Descriptive statistics were conducted while some diagnostic tests were piloted before the regression analysis. The random effect regression model was used to verify whether the studied variables impact shareholders’ wealth of listed service companies in Nigeria. Findings indicated that value added intellectual coefficient as a measure of intellectual capital has a significant positive association with shareholders’ wealth. Results further revealed that human capital efficiency, relational capital efficiency and capital employed efficiency (as components of intellectual capital) are significantly and positively associated with shareholders’ wealth while structural capital efficiency has a positive but not significant relationship with shareholders’ wealth creation. The study concludes that efficient management of intellectual capital can enhance shareholders’ wealth in listed service companies in Nigeria and recommends amongst others that firms should make strategic plans regarding intellectual capital and intangible assets as it can increase corporate competitive advantage.

UNRAVELING THE LINK BETWEEN OWNERSHIP STRUCTURE AND INTELLECTUAL CAPITAL EFFICIENCY: A STUDY OF NON-FINANCIAL FIRMS IN PAKISTAN

This study examined the effect of ownership structure on intellectual capital efficiency of nonfinancial firms listed on PSX 100 in Pakistan. This research has covered the data of non-financial firms from period 2010 to 2018 from the official website of Pakistan Stock Exchange and furthermore from the companies‟ financial statements. The independent variable of this research is ownership structure which is divided into five different categories family ownership, government ownership, institutional ownership, individual ownership and foreign ownership while the dependent variable of the research is value added capital efficiency which is divided into three components human capital efficiency, structural capital efficiency and capital employed efficiency which is calculated by using Public’s model Intellectual Capital Efficiency. The results of this study have shown that family ownership have a positive significant relationship with intellectual capital efficiency, government ownership a negative significant relationship with intellectual capital efficiency, institutional ownership a positive significant relationship with intellectual capital efficiency and foreign ownership structures have a positive significant impact on intellectual capital efficiency, while individual ownership, firm age, firm size and firm leverage have an insignificant impact on intellectual capital efficiency. The purpose of this study is to add to existing literature of ownership structure and intellectual capital efficiency in regard to Pakistan. Keywords: Ownership structure, intellectual capital efficiency, agency theory, resource-based theory.