Value-added Intellectual Coefficient Model Research Articles

Intellectual Capital, Financial Performance, and the Mediating Role of Financial Vulnerability

This study investigates the contribution of intellectual capital in enhancing firms' financial vulnerability and performance in Pakistan's emerging economy. This research considered ten years of data from 2011 to 2020 of non-financial firms listed on the stock exchange of Pakistan (PSX) and falls in the KSE-100 index. This research successfully applied a previously defined regression methodology to test the hypothesis investigating the significance of intellectual capital. Empirical investigation successfully reveals IC's significance in improving firms' financial vulnerability and performance using an aggregate measure of IC called value-added intellectual coefficient (VAIC) and its components human capital, structural capital, and capital employed efficiency. Financial Vulnerability mediates between intellectual capital and financial performance. The results of this study prove VAIC significance in developing countries like Pakistan. The study also shows that Pakistani investors and firms give IC weight in their investment decisions and must focus on IC for success in a competitive world. Accounting bodies should also focus on developing standards that incorporate IC as an asset. This study considered firms of multiple sectors to examine the significance of IC in Pakistani firms successfully. Along with enhancing IC literature, the VAIC model is significant in measuring IC in developing economies. This study also tried to extend IC literature in the context of the financial Vulnerability of firms and its indirect impact on financial performance.

Intellectual capital: A key driver of financial performance in the Macedonian banking industry

Research Question: How does intellectual capital, measured by the Value Added Intellectual Coefficient (VAIC) and its components, influence the financial performance of banks in North Macedonia? Motivation: In the evolving landscape of the banking sector, understanding the impact of intellectual capital on financial performance is crucial. This study builds upon existing research (Appuhami, 2007; Ozkan et al., 2017; Joshi et al., 2013) to explore this relationship in the specific context of North Macedonia. It addresses the research gap by using the VAIC model to quantify intellectual capital and examines its effect on Return on Assets (ROA) and Return on Equity (ROE). Idea: The research employs linear regression models to analyze the effect of intellectual capital, as measured by VAIC and its components, on the financial performance indicators ROA and ROE in Macedonian banks. Data: The study analyzes a decade of data (2012-2021) from ten Macedonian banks, using the VAIC model to measure intellectual capital. Tools: The study utilizes linear regression analyses with the Statistical Package for the Social Sciences (SPSS) to examine the relationship between intellectual capital and financial performance. Findings: The study finds a significant and positive impact of VAIC and its components on both ROA and ROE. These results underscore the importance of intellectual capital in enhancing financial performance in the banking sector. Notably, the study reveals a high average VAIC value among Macedonian banks, indicating their substantial intellectual capability. Contribution: This research adds to the literature by elucidating the relationship between intellectual capital, measured through VAIC, and financial performance in the banking sector of North Macedonia.

INTELLECTUAL CAPITAL AND FINANCIAL PERFORMANCE ON BANKING FIRMS IN INDONESIA

With the rapid advancement of global economic progress, lot of innovation has been made and attract researchers to investigate Intellectual Capital (IC). The purpose of this paper is to find any relationship Intellectual Capital toward Financial Performance. Using Value Added Intellectual Coefficient (VAIC) Model and the modified version as the research model. This study takes secondary data from companies that published its annual financial statement in Indonesia Stock Exchange during 2017 until 2022. The gathered data then analysed by using regression panel method. This research shows that Human capital doesn’t significantly affect ROA and ROE but does significantly affect ATO in both VAIC model and Modified VAIC model. Structural capital also insignificantly affects ROE and ROE but significantly affect ATO when tested using VAIC model. Capital employed and innovation capital is proven to a positive significant effect to all dependent variables.

Does Intellectual Capital Measurement Matter in Financial Performance? An Investigation of Chinese Agricultural Listed Companies

Intellectual capital (IC) has become a crucial strategic resource in the knowledge economy. The purpose of this study is to understand the IC-financial performance relationship of listed Chinese agricultural companies. This paper uses the original value added intellectual coefficient (VAIC) model, the adjusted VAIC (AVAIC) model, and the modified VAIC (MVAIC) model to measure IC. The results show a positive and significant relationship between IC and financial performance (return on assets and return on equity) in three models. Additionally, human capital and physical capital are two major driving forces. In the AVAIC model, innovation capital exerts a positive impact on financial performance, whereas this impact is not significant at the 5% level in the MVAIC model. The results suggest that further improvements in IC measurement are still needed. This study has important implications for both academia and industry regarding IC measurement.

ENTELEKTÜEL SERMAYE VE PERFORMANS ARASINDAKİ İLİŞKİ: TÜRK BANKACILIK SEKTÖRÜ ÜZERİNE BİR ÇALIŞMA

In this paper, considering the increasing importance of intellectual capital (IC), we focus on the effects of not only IC but also its three components on Turkish banks’ financial performance by using VAIC (Value Added Intellectual Coefficient) model. We use a sample of 20 banks operating in Turkey over the period 2013/Q4 - 2019/Q3. We measure financial performance by two widely accepted accounting ratios; namely, ROA and ROE. The results show that VAIC, human capital efficiency (HCE) and capital employed efficiency (CEE) are positively correlated with the banks’ financial performance. In particular, the results indicate the significance of overall intellectual capital, human capital, and financial and physical capital to both increase and sustain banks’ profitability.

The Impact of Intellectual Capital on Firms’ Performance: Evidence from Saudi Arabia

The purpose of this study is to empirically investigate the relationship between intellectual capital (IC) measured by the value-added intellectual coefficient (VAIC) and firms’ performance (FP) in the Saudi context. Data are drawn from a sample of 25 Saudi firms listed on the Saudi Stock Exchange (Tadawul) for the period 2015-2018. Using the VAIC model, the multiple linear regression models were constructed to examine the relationship between intellectual capital (IC) and firms’ performance (measured in terms of financial and market performance). The findings indicate that there is a positive association between overall intellectual capital efficiency as well as each of its three components (human capital efficiency, structural capital efficiency, capital employed efficiency) and the firms’ financial performance. Additionally, there is a positive association between human capital efficiency(HCE), structural capital efficiency (SCE), and the firms’ market performance. Overall, the findings suggest that human capital efficiency (HCE) has a significant and positive impact on firms’ financial and market performance in Saudi Arabia. The VAIC method may be a useful tool for managers and investors in their decision process. This is the first study about the impact of intellectual capital on firms’ performance in four industry groups in Saudi Arabia using the VAIC model.

Measures that matter: an empirical investigation of intellectual capital and financial performance of banking firms in Indonesia

PurposeThis study aims to investigate the intellectual capital–financial performance relationship using two models, namely the conventional Value-Added Intellectual Coefficient (VAIC) model and the adjusted Value-Added Intellectual Coefficient (A-VAIC) model.Design/methodology/approachThis study is designed as a quantitative research focusing on the relationship between intellectual capital and financial performance of the banking industry in Indonesia. As many as 114 data are derived from the publicly listed banks on the Indonesia Stock Exchange for the period of 2012–2017. The multiple regression analysis is employed to test the hypotheses studied.FindingsIn general, the result confirms that intellectual capital affects financial performance. Although not all hypotheses of the study are supported by either the VAIC model or the A-VAIC model, the results provide a deeper and new insight on how each component of intellectual capital efficiency (human capital, structural capital, capital employed, innovation capital) relates to financial performance (return on asset, return on equity, asset turnover, price to book ratio). The results also justify that further improvements in measuring intellectual capital are still needed in the future.Research limitations/implicationsThis study limits its generalization since the sample is only in the Indonesian banking industry. Notwithstanding the limitation, the results imply that the Indonesian banking managers need to be aware of intellectual capital management because of its strategic role in enhancing financial performance.Practical implicationsThis study contributes to the intellectual capital literature by providing empirical evidence on the use of both models, namely the conventional VAIC and the A-VAIC in the Indonesian banking industry research setting which is never been studied before.Social implicationsThis study has the social implication to the enhancement of the quality life of the society. The higher the quality of intellectual capital in the banking firms, the better the banks serve the needs of the community.Originality/valueThis study contributes to the IC literature by providing empirical research on the use of the VAIC model and the A-VAIC model in the Indonesian banking industry.

Does VAIC affect the profitability and value of real estate and infrastructure firms in India? A panel data investigation

PurposeThis study aims to investigate whether intellectual capital (IC) and its subcomponents enhance value and improve the profitability of real estate (RE) and infrastructure (INF) firms in India. In this study, IC is measured through the value-added intellectual coefficient (VAIC) model. The study further extends the VAIC model by incorporating an additional component of social welfare efficiency (SWE).Design/methodology/approachThe study uses the panel data investigation based on the data of 63 firms (22 RE and 41 INF firms), for a period of 10 years (2008–2017). The dependent variables in the study are return on assets (ROA) and market price to book value ratio (PB), whereas the independent variables are VAIC and its components. The panel is tested for stationarity, heteroscedasticity and multicollinearity problems. Finally, to account for heteroscedasticity and endogeneity, Arellano and Bond's (1991) panel regression estimator with robust estimates are used.FindingsThe findings of the study suggest that IC has a significant influence on the profitability and value of infra firms, whereas capital-employed efficiency (CEE) positively affects the profitability of both RE and INF firms.Originality/valueThe study is an attempt to find the effect of IC and its components on profitability and value of RE and INF firms in India. The author has also extended the VAIC model, which was introduced by Pulic (2000), by adding an additional IC component, i.e. SWE. The study uses Arellano and Bond's (1991) panel regression estimator with robust estimates, which helps produce robust results.

Intellectual capital and firm performance: an extended VAIC model

PurposeThe purpose of this paper is to propose an extended and modified value-added (VA) intellectual coefficient (VAIC) model, which includes intellectual capital (IC) components which were missing in the original VAIC approach. The proposed model has been used to explore the relationship between IC and firm performance for Turkish manufacturing firms on a more detailed level.Design/methodology/approachMultiple regression analysis has been employed to identify the IC components, which predict the performance of the firm and the moderating effect of some IC components on IC components–firm performance relationship. Data are required to calculate the IC components, and firm performance variables have been obtained from the financial reports of the Turkish manufacturing firms for the period 2003–2013.FindingsAccording to the results for Turkish manufacturing sector innovation capital efficiency has a moderating effect on the relationship between structural capital efficiency (SCE) and profitability, meaning, depending on an increase in R&D expenses, the effect of SCE on profitability also increases. On the other hand, it has been found that innovation capital efficiency has a direct impact on firms’ productivity. The results also showed that IC efficiency components have a moderating role on the relationship between capital employed efficiency and profitability.Research limitations/implicationsThere might be a time lag until the effect of R&D investments can be observed in firms’ performance. However, this lagged impact of innovation capital and also other IC components on future firm performance has not been investigated due to concerns related to sample size.Originality/valueThe proposed model differs from the original VAIC model in three ways: it, namely, includes two additional IC components, customer capital (CC) and innovation capital. It explores the moderating effect of innovation capital on structural capital–firm performance relationship and the moderating effect of IC components on employed capital–firm performance relationship. As the last difference, it proposes an alteration in the VA calculation due to newly added IC components, CC and innovation capital.

Impact of intellectual capital on firm's value: The moderating role of managerial ownership

Rapidly changing dynamics of globalization and increasing market competition are causing the companies all around the world, to confront several new challenges and opportunities. This study proposes to inspect the impact of intellectual capital on firm's value. Further, the moderating role of managerial ownership has been evaluated with the help of regression analysis. The sample included the panel data taken from non-financial firms, listed on PSX (Pakistan Stock Exchange) over the period 2010–2015. VAIC (Value Added Intellectual Coefficient) Model was used for the calculation of intellectual capital. Tobin's Q was taken as the measure of firm's value. It is concluded that the relationship between intellectual capital and firm value was positively significant. It is also concluded that managerial ownership moderated the relationship between predictor i.e. intellectual capital and outcome variable, i.e. firm's value, negatively.

Capital regulation, competition and risk-taking behavior of Indian banks in a simultaneous approach

PurposeThe purpose of this paper is to investigate the association between capital regulation and risk-taking behavior of Indian banks after incorporating the influence of competition. Further, the study intends to enrich the existing literature by providing empirical evidence on the role of human resources in managing risk along with the influence of other bank specific and macroeconomic variables.Design/methodology/approachSecondary data on 39 listed Indian commercial banks are collected from “Capitaline Plus” corporate data database for a period of 15 years. Capital is measured by capital adequacy ratio as defined by the regulators, and two definitions of risk – credit risk and insolvency risk – are employed. Competition is measured by Herfindahl-Hirschman deposits index, concentration ratio andH-statistic. The value-added intellectual coefficient model is employed to compute human capital efficiency (HCE). Three-stage least squares technique in a simultaneous equation framework is used to estimate the coefficients.FindingsThe study finds that absolute level of regulatory capital and bank risk are positively associated, although the influence of capital on risk is not statistically significant. The influence of competition on risk is negative for all the models, which supports the “competition stability” view. The impact of human capital on bank risk is also negative for all cases.Practical implicationsThe findings of the study are useful for the decision makers in several ways based on the inverse influence of competition and HCE on bank risk. Further, the observed positive association between capital and risk indicates that the capital regulation is not sufficient to enhance the stability in the banking sector.Originality/valueThis is the first study in the Indian context that incorporates the competition in the banking industry as an explanatory variable in the extant bank capital and risk relationship.

Intellectual capital and firm performance in India: a comparative study between original and modified value added intellectual coefficient model

With the dawn of a knowledge economy, the role of intellectual capital in value creation and sustainable competitive advantage became evident. With increasing importance of intellectual capital, the emphasis on its management and measurement increased manifolds. The Pulic's value added intellectual coefficient (VAIC) model is one such method that has been widely used for measuring intellectual capital and examining the link between IC and firm performance. However, this model has been criticised because of its inefficiency to capture the structural capital of a firm. The present study is a modest attempt to modify Pulic's VAIC model with the primary intention of dealing with the structural capital measurement deficiency. Employing panel data and quantile regression on Indian firms for a period of 15 years from 2000-2001 to 2013-2014, the study finds that both original VAIC model and the modified model advocate in favour of the positive influence of IC and its components on firm performance. With respect to structural capital, the study reveals that the modified VAIC model to some extend captures the structural capital efficiency of a firm more efficiently than the original model.

Intellectual capital and market performance: The case of multinational R&D firms in the U.S.

Intellectual capital (IC) is considered as a key resource in business. However, it is difficult to measure and compare across firms due to its intangible nature. The Value Added Intellectual Coefficient (VAIC) model proposed by Pulic (1998; 2000) might be used to overcome these issues. The purpose of this study is to apply the VAIC model to investigate the impact of IC on market performance among R&D engaging firms. The sample for this study comprises multinational firms listed on the United States (U.S.) stock exchanges which engaged in R&D activity during the period 2006-2013. The sample employed consists of 1,328 firm-year observations and the data were obtained from the Compustat database. Market performance is measured using the market-to-book ratio and Tobin’s q ratio. The study employs the VAIC model to measure aggregate IC efficiency and its elements: human capital efficiency, structural capital efficiency and tangible capital efficiency. The study also controls for the effects of size, leverage, year and industry on market performance. The data were analyzed using descriptive, correlation and multiple linear regression analyses. From the regression analysis, the results indicate that aggregate IC efficiency has a positive and significant association with market performance among R&D firms. However, among the components of aggregate IC efficiency, human capital efficiency has no significant association with R&D firms’ market performance while structural capital efficiency and tangible capital efficiency have a positive and significant association with market performance. The findings suggest that the synergy derived from the combination of IC and tangible resources has a significant influence on the market valuation of R&D firms. The finding also suggests the importance of structural and tangible capital over human capital in R&D engaging firms. The findings provide not only empirical evidence on the relationship between IC and market performance among R&D engaging firms, but also provides important further evidence on the VAIC model as an IC measurement method. Empirical studies to date have found mixed evidence on the adequacy of the VAIC model. In respect of structural and tangible capital the results of this study provide support for the VAIC model; but not in respect of human capital.

Empirical Validity of Value Added Intellectual Coefficient Model in Indian Knowledge-based Sector

The purpose of this study is to investigate empirically the validity of the basic propositions of value added intellectual coefficient (VAIC) and extend VAIC models in Indian knowledge-based sector. Using panel data relating to 62 firms from two Indian knowledge-based sectors, namely, electronics and banking sectors, for a period of 10 years (from 2001–2002 to 2010–2011), the study indicates that the VAIC model cannot be rejected as a technique of measuring intellectual capital. The result shows that VAIC significantly and positively influences the corporate performance measured by return on assets (ROA) and market-to-book (M/B) ratio. All the components of VAIC except structural capital (SC) efficiency (SCE) significantly and positively influence the corporate performance. The insignificant association between SCE and firm performance, as observed in the present context and also observed earlier by many researchers, may be regarded as the inappropriateness of the model in capturing structural capital. In order to modify the SC component of the model, the components of extended VAIC model may be used as a value-creating entity.

Analysis of the effects of intangible assets on corporate financial value

Intellectual capital is knowledge that can be converted to value and researchers consider it to consist of the following components: human capital, structural capital, customer capital, and social capital. These components of intellectual capital are typically found in the minds of employees and within organisational structures and processes. In order to give intellectual capital a high level of attention and effectively manage an environment that helps to facilitate intellectual capital transfer, management must understand how it is transferred throughout the organisation. This study tries to illustrates relationship between intellectual capital (IC) of firms listed on the Iran Stock Exchange and their market value and profitability. The research uses value added intellectual coefficient (VAIC), to measure the IC of companies. The data sample is collected from 82 companies listed on the Tehran Stock Exchange between the years 2005 and 2012. The research investigates three hypotheses and used multiple regressions for the data analysis. The findings showed that IC and company performance are positively related and IC is correlated to future company performance. Modified VAIC model indicates efficiency in creating corporate value and the extent of corporate intellectual abilities. In the light of the high degree with M/B ratio, ROA and ROE, the results demonstrate that increase the firms’ intellectual capital will positively influence firms’ market value and profitability.