Value Added Intellectual Coefficient Research Articles

Intellectual capital and market value: evidence from Jordan

This research aims to apply the value-added intellectual coefficient (VAIC) model to test the impact of intellectual capital (IC) on market value of the Jordanian industrial firms. The research increases the awareness of the need for firms of all sizes to communicate and value their business beyond capturing numbers alone. The sample for this study is 73 Jordanian manufacturing shareholders companies during the period 2005–2017. The sample employed consists of 648 firm-year observations. Market value is measured using the market capitalization over the total assets. Valuation approaches are a challenging area created to enable the stakeholders, or outside parties, to put an economic value on a firm.The IC and its components: capital employed (CEE), structural capital (SCE), and human capital (HCE) of industrial firms have been analyzed, and their impact on market value has been estimated using regression models. The results show that there is no relationship between IC and the market value; HCE is associated with the market value, and SCE and CEE are not associated with the market value. This could be explained by the increase in employees’ training, as a regular training program is an essential factor in managers’ and employees’ performance. Practically, investors have a positive view of a firm that has higher employee expenditure than its investment in physical capital. Future research should be made on the empirical analysis of other sectors to determine whether different results and explanations can be obtained.

Achieving Business Performance Via Implementation of Knowledge Management

This article explores whether organisations that have received the Most Admired Knowledge Enterprises (MAKE) award boast better business performance relative to those that have not received or participated in the award. This quantitative study is based on 59 MAKE award winners in 2009, along with 59 counterparts. Financial data were collected from publicly available annual reports for the period 2009-2016. Applying the Value Added Intellectual Coefficient (VAIC) methodology, regression models were developed to examine the associations and connections between MAKE and non-MAKE companies' Intellectual Capitals and their financial performance indicators. Based on correlation and linear multiple regression analysis, the VAIC components (HCE, SCE and CEE) have no statistical predictive trend for market value (MB). However, HCE, SCE and CEE were significant predictors of three corporate financial performance indicators (ROA, ATO and ROE). The group of non-MAKE companies demonstrates a higher VAIC value. There is no statistical significance between the two groups' business performance.

Human capital efficiency and profitability of quoted integrated oil and gas companies in Nigeria

Human capital represents the engine that drives the entity and the foundation on which organizational success rests. This study examines the impact of human capital efficiency on profitability of five Integrated Oil and Gas companies in Nigeria between 2008 and 2017. This was examined by means of value added intellectual coefficient (VAIC) and it analyses how human capital efficiency affects the profitability of these firms measured by return on assets (ROA) and return on equity (ROE). Multiple regression technique was applied on data to draw inferences using STATA Version 13. The finding of the study reveals that Human capital efficiency has positive and significant impact on the ROA of the firms under study. Based on the findings of the study, it is therefore, recommended that integrated oil and Gas companies in Nigeria should continue to invest more on their employees in order to improve their performance. The study also recommends that Human Capital should be treated as the most valuable asset of integrated oil and Gas companies in Nigeria.

Empirical Linkage of Intellectual Capital and Performance of Islamic Banks

With the eminence of the era of knowledge-based economies, the concept of intellectual capital (IC) is of vital importance for organisations to survive in these vigorous environments. As one of the knowledge intensive sectors, there is no exception to banking institutions in enhancing their intellectual capital efficiency to the forefront especially for Islamic banks (IBs) that have to compete with the firmly-established conventional banks. Accordingly, this study intends to measure the relationship between intellectual capital efficiency and banks’ performance. In total, 59 Islamic banks are selected and their audited annual reports are compiled from the banks’ websites respectively from year 2006-2017. Value-added intellectual coefficient (VAIC) are applied in measuring IC efficiency. The findings provide empirical evidences of positive relationship between IC efficiency and banks performance, nonetheless, when decomposes into human capital efficiency (HCE), structural capital efficiency (SCE) and capital employed efficiency (CEE), only human capital efficiency shows significant positive relationship with performance of the banks while the other two components show significant negative linkage with bank performance. Furthermore, due to criticisms towards VAIC method, this study using modified value-added intellectual capital coefficient (MVAIC) and found that MVAIC has significant positive relationship with bank performance while relational capital as additional variable in MVAIC regression model has no significant effect with bank performance. This study provides better insights on the importance of utilisation of IC by banking institutions particularly for Islamic banks.

Examining the Impact of Corporate Governance on Intellectual Capital: Empirical Evidence of Islamic Banks

Using the sample of 59 Islamic banks during the period of 2006-2017, the purpose of this paper is to examine the impact of corporate governance mechanisms through the characteristics of board of directors that may influence the intellectual capital (IC) efficiency of Islamic banks. The characteristics of board of directors are represented through the size of the board (board size), the proportion of female members on the board (board female), the number of board meetings (board meeting), the proportion of board members who have financing and accounting expertise (board expertise) and the diversity in terms of board members’ nationalities (board nationality diversity). Meanwhile, IC efficiency has been measured using value-added intellectual coefficient (VAIC). This study provides empirical evidence showing that board expertise has positively associated with IC efficiency. This study also examines the linkage between corporate governance mechanisms and IC components namely HCE, SCE and CEE and found that board expertise exerts positive significant impact to HCE and SCE while no significant impact to CEE. Additionally, board female has significant positive relationship with SCE. The study is extremely pivotal in order to know the determinants that can contribute to the enhancement of IC efficiency in respect of corporate governance of Islamic banks.

The Moderating Effect of Institutional Ownership on Intellectual Capital and Financial Performance of Listed Conglomerates

Purpose - The study aims to examine the moderating effect of institution on the relationship between intellectual capital on the financial performance of conglomerates in Nigeria
 Design/Methodology - correlational research design which is based on historical data extracted from annual report and accounts of the sample firm on NSE. Firms were chosen based on censor sampling method. Eleven years of financial data were used. Multiple regression analysis was employed to analyze the data extracted.
 Findings - The results from pooled ordinary least square regression (OLS) and Fixed effect revealed that intellectual capital indexed by a value-added intellectual coefficient (VAIC) has a positive and significant impact on financial performance indexed by return on asset (ROA) of listed conglomerate firms in Nigeria. Furthermore, the interaction effect of institutional ownership was found to be positive and significant
 Practical Implications - The study recommends that institutional shareholders should invest more in shares of listed conglomerate firms in Nigeria and that management should recognize the effort and understand the importance of intellectual capital toward improving firm performance.

Measuring Intellectual Capital of Turkish Banks Listed on Borsa Istanbul Banking Index (BIST XBANK) with the Market Value / Book Value Method and Value Added Intellectual Coefficient (VAIC) Model

Intellectual capital is a critical concept to realize and reflect the real value of organizations. This study took advantage of Market Value (MV) / Book Value (BV) method and Value Added Intellectual Coefficient (VAIC) model to measure and compare intellectual capital of Turkish banks listed on Borsa Istanbul Banking Index (BIST XBANK). Also, financial indicators such as Return on Assets (ROA), Return on Equity (ROE), Leverage, (LEV), Capital Adequacy Ratio (CAR) and intellectual capital performance indicators such as MV/BV ratio, Human Capital Efficiency (HCE), Structural Capital Efficiency (SCE), Capital Employed Efficiency (CEE) and VAIC of banks were compared. Research also ran a Pearson Correlations Test to investigate the relationship between these indicators and to test the hypothesis. Data were gathered from Istanbul Stock Exchange - ISE (Borsa Istanbul), Public Disclosure Platform (KAP), Banks Association of Turkey – TBB (Türkiye Bankalar Birliği), Banking Regulation and Supervision Agency (BRSA), Fortune Turkey, Anadolu Agency and Hurriyet.

Intellectual Capital, Profitability, and Productivity: Evidence from Pakistani Financial Institutions

The idiosyncratic and knowledge-intense nature of the financial institutions requires them to rely more on intangible than on tangible resources. Over the past two decades, researchers have been motivated to embark on the relationship between intellectual capital (IC) and performance of financial institutions. Considering the knowledge-based intellect as a critical skill of this era, the current study examines the impact of IC on the performance of 111 Pakistani financial institutions (PFIs) over the period 2007–2018. Two IC measures, i.e., value-added intellectual coefficient (VAIC) and modified value-added intellectual coefficient (MVAIC), were applied to examine the impact of IC on profitability and productivity. Robust results from the fixed effect regression and generalized method of momentum affirm the inverted U-shaped relationship between IC and performance, suggesting that the increase in IC performance of PFIs increases their profitability and productivity up to a certain level, and after that, a further increase in IC performance decreases profitability and productivity. The results further suggest that human capital is the most influencing intellectual resource which produces higher intellectual efficiencies and increases the performance significantly. The results of this study are likely to be helpful for management, regulators, policy makers, and academics and provide insights into the importance of IC and suggest that the investment in the IC improves the sustainable performance to a certain extent.

Diversity in Estimates of the Impact of Intellectual Capital on Firm Performance Created by Varied Adoptions of <i>VAIC</i> Method

Value Added Intellectual Coefficient (VAIC) method has become the most efficient method for measuring intellectual capital (IC). However, there are inconsistencies in the mechanism of adopting the VAIC method to measure IC, thus questioning the robustness of established relationships between IC and firm performance. Therefore, this study attempts to examine the diversity in estimates of the impact of IC on firm performance as a result of adopting the VAIC method in a diverse manner. The study also proposes a modification to the basic VAIC method to eliminate its key limitation. Findings of the study indicate that there are differences in the estimates of the impact of IC on firm performance as a result of varied VAIC adoptions. The proposed modification to the basic VAIC method incorporates theoretically agreed value compositions of IC (human capital, structural capital and relational capital) replacing traditional value compositions (human capital and structural capital) in the basic VAIC method.

Intellectual Capital of Malaysian Banks

The importance of intellectual capital has induced drastic movement in conducted of businesses by switching from traditional labour to knowledge labour whereby to compete with the incumbents and the newcomers. On this note, services sector especially banking industry plays a vital role in the development of economies that affected overall in gross domestic product compared to the other production sectors thus intellectual capital is important to the growth of banking sector in a nation. Therefore, the general objective of this study is to investigate the intellectual capital of Malaysian banks over the study period of 2007 to 2016 by employing Model of Value Added Intellectual Coefficient (VAIC). In view of the above scenarios, the specific objectives of this study is to investigate the sources of intellectual capital namely human capital efficiency (HCE), structural capital efficiency (SCE) and capital employed efficiency (CEE) of the Malaysian banking institution. The results of this study show that human capital efficiency is the most influential components in the intellectual capital among Malaysian banks. Thus, the findings of this study recommend on the bank’s management and policy makers to increase on the efforts to encourage the utilizing in human capital which is treated as an effective alternatives in creating bank's value as well as consider the human capital as a single resources of the intellectual capital in improving on the efficiency performance of the banks.

The Influence of Intellectual Capital on Corporate Performance of The Turkish Wholesale and Retail Trade Companies

This study aims to discuss the influence of intellectual capital on corporate performance of the Wholesale and Retail trade companies listed in Borsa Istanbul. The study utilized data collected from 26 listed companies for the period of 2010-2015. The Value Added Intellectual Coefficient (VAIC) model has been used to calculate Intellectual Capital Efficiency (ICE), while corporate performance has been measured using traditional accounting measures, such as; Market, Productivity, and Financial performance. Market performance is represented by market to book ratio (MB) and price to earnings ratio (PE), productivity performance is measured by assets turnover ratio (ATO), and financial performance is represented by return on assets (ROA), return on equity (ROE), and earning per share (EPS) ratios. Panel data regression model is utilized to find the relationship between IC and its components; Human capital Efficiency (HCE), Structural Capital Efficiency (SCE), and Capital Employed Efficiency (CEE), with company’s performance represented by Market, Productivity, and Financial performance. The findings indicated that Turkish wholesale and retail trade companies are paying good attention to the use of the VAIC components especially HCE in value creation.

Pengaruh Modal Intelektual Terhadap Pertumbuhan Koperasi Di Kota Kupang

The purpose of this study was to find a causal relationship between Intellectual Capital and the growth of cooperatives in Kupang City. Intellectual capital in this study was measured using Value Added Intellectual Coefficient (VAIC) while the growth of cooperatives was measured using changes in the natural logarithm of the cooperative's total assets. The population in this research were all cooperatives registered with the Kupang Cooperative and SME Office. The sample selection uses purposive sampling, namely cooperatives that have issued cooperative financial statements from 2011-2017. The test model applied includes descriptive statistics, classic assumption tests, simple and multiple regression analysis. The results showed that Intellectual Capital (which is proxied by VAIC) had an effect on the growth of cooperatives in Kupang City. But among the 3 components that make up VAIC, namely CEE (Capital Employed Efficiency), HCE (Human Capital Efficiency), and SCE (Structural Capital Efficiency), only CEE has a significant effect on the growth of cooperatives in Kupang City. This can be interpreted that in general cooperatives in Kota Kupang focus more on the growth of their business through efficient use of physical capital compared to improving the quality of their human resources.

Impact of Intellectual Capital on Financial Reporting Quality of Selected Banks in Nigeria

The study examined the impact of intellectual Capital on Financial reporting quality of selected Banks in Nigeria. The specific objective of the study was to investigate the impact of Intellectual capital on financial reporting quality on selected Banks. A total of ten banks were selected for the study from 2006-2017. Regression analysis was used to do the analysis. They study made use of Value Added Intellectual Coefficient (VAIC) to ascertain the extent of intellectual capital indices while Fincial reporting quality is proxy by accrual which was calculated using Dechow and Dichev’s(2002) model. The result indicated a positive impact on Fincial reporting quality. The study therefore concludes that Banks should pay more attention to the three intellectual capital variables to improve their financial reporting quality. The study recommends that the three variables of intellectual capital should be well handled in other to have higher quality of financial reporting quality and also provide enabling environment needed to achieve a vital human capital in their system. Keywords : Intellectual Capital, Financial Reporting Quality, Nigeria Banks, Value Intellectual Coefficient, Dechow and Dichev model (2002) DOI : 10.7176/EJBM/11-16-09 Publication date :June 30 th 2019

PENGARUH MODAL INTELEKTUAL TERHADAP PERTUMBUHAN KOPERASI KOTA KUPANG

The purpose of this study is to find the effect of intellectual capital on the growth of cooperatives in Kupang City. Quantitative method is used in this study while data is taken from the cooperative's financial statement from 2011-2017. The intellectual capital is measured by Value Added Intellectual Coefficient (VAIC) while cooperative growth is measured by natural logarithm of the change in cooperative's total assets. The population in this study is all cooperatives that registered in Dinas Koperasi Kota Kupang, totaled 64 cooperatives and 6 cooperatives chosen as the sample using purposive sampling method. The results showed that Intellectual Capital have significant effect on the growth of cooperatives in Kupang City. The theoretical implication shows that indicators in VAIC can be applied in measuring the cooperatives’ growth. As the practical implication, this study offer insight for the decision maker in order to increase the growth of cooperatives in Kupang City.

PENGARUH MODAL INTELEKTUAL TERHADAP PERTUMBUHAN KOPERASI KOTA KUPANG

The purpose of this study is to find the effect of intellectual capital on the growth of cooperatives in Kupang City. Quantitative method is used in this study while data is taken from the cooperative's financial statement from 2011-2017. The intellectual capital is measured by Value Added Intellectual Coefficient (VAIC) while cooperative growth is measured by natural logarithm of the change in cooperative's total assets. The population in this study is all cooperatives that registered in Dinas Koperasi Kota Kupang, totaled 64 cooperatives and 6 cooperatives chosen as the sample using purposive sampling method. The results showed that Intellectual Capital have significant effect on the growth of cooperatives in Kupang City. The theoritical implication shows that indicators in VAIC can be applied in measuring the cooperatives’ growth. As the practical implication, this study offer insight for the decision maker in order to increase the growth of cooperatives in Kupang City.

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.

Extended Value-Added Intellectual Coefficient and Financial Reporting Quality: Moderating Role of Global Financial Crisis

Besides traditional approaches, this study aimed to construct and validate the new model of intellectual capital and financial reporting quality and created a deeper and better understanding through the use of rigorous secondary data. It adopted new formula of intellectual capital instead of traditional primary measures and explored the role of financial reporting quality in financial success of firms. Study is helpful for decision makers, especially from the manufacturing sector, to mould their practices accordingly and they will also realize the importance of high financial reporting quality. The study used Three-stage least squares regression analysis to investigate the relationship between variables. Extended Value-Added Intellectual Coefficient method is used to measure intellectual capital and discretionary revenues method is used to measure financial reporting quality. Panel data was collected from 50 firms, included in fortune global 500 companies list from 2007 to 2017. Findings disclosed that intellectual capital and process capital has a significant impact on financial performance. Human capital and relational capital negatively influence however, innovation capital and financial reporting quality positively influence financial performance. Global Financial Crisis positively moderates the effect of intellectual capital on financial performance but it doesn’t moderate the effect of financial reporting quality on financial performance. Keywords: Financial Reporting Quality, Intellectual Capital, Global Financial Crisis, Financial Performance, Three-stage least squares regression DOI : 10.7176/RJFA/10-10-12 Publication date :May 31 st 2019

Intellectual Capital Performance and Profitability of Banks: Evidence from Pakistan

The study contributes to the existing literature on intellectual capital (IC) performance and profitability by extending evidence from Pakistan. The study examines the impact of IC performance on the profitability of Pakistani financial institutions. It further examines how corporate governance, bank specific, industry specific, and country specific indicators effect Pakistani banks’ profitability. The result reports both the linear and non-linear impact of IC performance on profitability, which affirms an inverted U–shaped relationship. Among the three value added intellectual coefficient (VAIC) components, capital employed efficiency (CEE), and human capital efficiency (HCE) are found to have a significantly positive and structural capital efficiency (SCE) is found to have a significantly negative impact on bank profitability. The study notes a positive impact on profitability of factors like board independence, directors’ compensation, and higher capitalization. It reports a negative impact on profitability of factors like board size, board meetings, credit risk, industry concentration and economic growth. The results also indicate low profitability of banks during the period of government transition. The study provides insights into the important profitability drives and suggests that the impact of investment in IC on profitability is limited to an extent. The findings of this study are likely to be useful for policy makers, management, and academics.

How to keep renewable energy enterprises to reach economic sustainable performance: from the views of intellectual capital\xa0and life\xa0cycle

BackgroundIntellectual capital can not only help companies to obtain sustainable competitive advantage, but also serve as a key factor in corporate performance improvement and value creation. For knowledge-intensive and technology-intensive renewable energy companies, the effective management of intellectual capital is particularly important. However, there is a huge gap between the book value of renewable energy companies and their market value. It will be difficult to establish the most appropriate development strategy for companies by evaluating the corporate performance only based on financial indicators. Therefore, studying the value creation effect of intellectual capital will not only make new energy companies pay more attention to the intellectual capital management, but also help renewable energy companies achieve sustainable corporate performance.MethodsBy choosing the listed renewable energy companies from 2010 to 2016, this paper conducts an empirical research based on the Ohlson model and use quantile regression to analyze the impacts of value-added intellectual coefficient (VAIC) on sustainable performance at different life cycle stages.ResultsThe results confirm that increasing the VAIC creates value for enterprises. It also examines the effect of life cycle on this impact, and the result shows that it does not change the significant positive correlation with the economic sustainable performance at different life cycle quantiles. This paper also concludes that value-added human capital coefficient (VAHU) and value-added capital assets coefficient (VACA) are the most important component of intellectual capitals to economic sustainable performance at the growth stage, maturation stage, and decline stage.ConclusionsThus, it is suggested that renewable energy enterprises should emphasize on corporate intellectual capital management activities and design intellectual capital management solutions specifically for a certain life cycle stage.

Impact of Intellectual Capital on Financial Performance of Firms : A Study on Tourism and Hospitality Firms in India

This paper assessed the relationship existing between intellectual capital (IC) and financial performance of tourism and hospitality services firms in India. Data comprising of 720 firms were sourced from Prowess database for a period of 12 years. The study measured IC efficiency using the value added intellectual coefficient (VAIC) model developed by Pulic (2000). The study applied fixed and random effect models to account for differences (unobserved effects) across firms. The results confirmed the existence of a positive relationship between VAIC and performance of firms operating in the tourism and hospitality industry in India. Furthermore, unlike the dicey results of physical and structural capital, human capital was found to be the most influential component of IC, which had a significant impact on both return on assets and sales growth, suggesting that human capital is still the most important tool driving financial performance. Therefore, managers of such firms can manage their performance by investing in their human resources through training and development programs to enhance their skills needed to be more functional in this knowledge economy.