An Examination of the Value Relevance of Intellectual Capital: The Case of Banking Industry

Kehelwalatenna, Sampath; Premaratne, Gamini

doi:10.2139/ssrn.2174211

Cited by 5 publications

(6 citation statements)

References 24 publications

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“…Similar results were obtained by Gamerschlag (2013) using a German sample, and Ellis and Seng (2015) using a sample from New Zealand. In contrast, a study in Italy by Ferraro and Veltri (2011), and in the USA by Kehelwalatenna and Premaratne (2013), failed to document a conclusive relation with market value.…”

Section: Introductionmentioning

confidence: 88%

The value relevance of intellectual capital disclosure: empirical evidence from Kuwait

Alfraih

2017

JFRC

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Purpose Drawing on market efficiency theory and studies on intellectual capital (IC) disclosure, this study aims to examine if IC information provided in the corporate annual reports of Kuwait Stock Exchange (KSE) listed companies in 2013 is value-relevant. Design/methodology/approach The analysis is divided into two parts. First, the level of intellectual capital disclosure (ICD) of KSE-listed companies is examined using the content analysis method. Second, the value relevance of financial reporting is examined empirically using Ohlson’s (1995) valuation model. Findings The results reveal that ICD is positively and significantly associated with market value, suggesting that greater ICD is valued by KSE market participants, who incorporate it into their valuation models. Practical implications Given the importance of ICD in enhancing equity valuation, a practical implication of this study is to make managers aware of its positive and significant effect on equity valuation, which may encourage companies to increase their level of disclosure. Originality/value This is the first study of the association between the level of ICD and the value relevance of financial reporting for market participants in Kuwait. It therefore extends and confirms the prior literature by broadening its scope to include frontier markets. Furthermore, it provides empirical evidence in support of recent calls from regulators and professional bodies for information that supplements and complements traditional financial reporting.

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Section: Introductionmentioning

confidence: 88%

The value relevance of intellectual capital disclosure: empirical evidence from Kuwait

Alfraih

2017

JFRC

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“…Intellectual capital (IC), which is generally understood to encompass the knowledgerelated intangible assets of a firm (Kehelwalatenna & Premaratne, 2013), has gained recognition as an important strategic asset in the knowledge-based economy. This recently emerged subset of resources of the firm, which is also known as the fourth production factor (Goh, 2005;Lev & Daum, 2004), creates competitive advantages and superior performance in a sustainable manner for modern organizations (Yalama & Coskun, 2007).…”

Section: Introductionmentioning

confidence: 99%

Intellectual capital performance and its long-run behavior: The US banking industry case

Kehelwalatenna¹,

Premaratne²

2014

New Zealand Economic Papers

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This paper examines the impact of intellectual capital (IC) on the corporate performance of banking firms listed on the New York Stock Exchange from 2000 to 2011 as an attempt to rectify observed modeling issues in the extant IC performance models. It also studies the long-run behavior of IC as a strategic asset in the valuecreation process. We propose four dynamic models to estimate IC performance, and the evidence of these models concludes that IC has a positive influence on the performance of the sample firms. However, the IC level and the magnitude of its influence on corporate performance have deteriorated over the sample period, raising doubts about the appropriateness of using IC as a strategic asset in the long term.

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“…This means that the overall disclosure of human capital information is not yet of value relevant in the stock market in Indonesia. This shows that investors in Indonesia still see human capital as something uncertain in providing future benefits (Kehelwalatenna & Premaratne, 2013). Moreover, information related to this human capital is spread throughout the annual report, making it more difficult for investors to link that information with the market value of the company.…”

Section: Discussionmentioning

confidence: 99%

“…Research by Kehelwalatenna & Premaratne (2013) in New York that only use a banking company as a sample, who also want to find the value relevance of intellectual capital information (which includes human capital) to share prices. The measurement of human capital in this study is through the calculation of financial indicators, namely the value creation efficiency of human capital, which contains the burden of employees.…”

Section: Yie Ke Feliana and Ester Novitamentioning

confidence: 99%

Value Relevance Human Capital Information on the Annual Report of Indonesia Listed Companies

Feliana

Novita

2018

Jurnal Keuangan Dan Perbankan

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Human resources at the companies in Indonesia should be an important focus for investors, due to the general complaints of low labour productivity compared to other countries. This study aimed to investigate the value relevance of human capital disclosure and changes of human capital disclosure to share price and share return on listed companies at Indonesia Stock Exchange from all industrial sectors in 2016. Human capital information measured by word counting of information related to human capital in the firm annual report. The results showed that the disclosure information of human capital was value relevant with share price but only from qualification/ competencies category. For the disclosure changes in human capital, information did not show any significant effect to return per share. Thus, generally Indonesia investors only focus on information on qualification/competency human resources in companies at that time, other information was ignored.

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An Examination of the Value Relevance of Intellectual Capital: The Case of Banking Industry

Cited by 5 publications

References 24 publications

The value relevance of intellectual capital disclosure: empirical evidence from Kuwait

The value relevance of intellectual capital disclosure: empirical evidence from Kuwait

Intellectual capital performance and its long-run behavior: The US banking industry case

Value Relevance Human Capital Information on the Annual Report of Indonesia Listed Companies

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