Impact of Intellectual Capital on Firm Value: The Moderating Role of Managerial Ownership

Abstract

Rapidly changing dynamics of globalization and increasing market competition are 11 causing the companies all around the world confronting several new challenges and opportunities.12 To be competitive and successful apart from relative importance of physical resources, companies 13 must adapt modern strategies and policies regarding market flexibility and development. The 14 purpose of this study is to empirically investigate the relationship between intellectual capital and 15 firm value. Furthermore, the moderating role of managerial ownership has been evaluated with the 16 help of regression analysis. The sample included the panel data taken from non-financial firms listed 17 on Pakistan stock exchange (PSX) covering the period 2010-2015. A sample of 79 firms out of 384 18 firms have been selected with the help of systematic sampling technique. VAIC (Value Added 19 Intellectual Coefficient) model has been used for the calculation of intellectual capital. Tobin's Q has 20 been taken as a measure of firm value. Managerial ownership has been tested as moderator. Based 21 on data analysis, it is concluded that the relationship between intellectual capital and firm value is 22 positively significant. It is also concluded that managerial ownership moderates the relationship 23 between intellectual capital and firm value negatively.24

Intellectual capital efficiency and organisational performance

“…Human capital, structural capital, capital employed or external capital are referred to as the three basic components of intellectual capital (Ahmed et al , 2019; Kalkan et al , 2014; Nuryaman, 2015). Kalkan et al (2014) affirmed that human capital is the key source of a company’s intangible assets.…”

“…The research found a positive and significant relationship between intellectual capital and firm value. Ahmed et al (2019) also used the VAIC model to calculate intellectual capital and used Tobin’s Q to measure firm value.…”

“…Value creation, in the knowledge-based economy, is mostly determined by the effective utilisation of intangible assets. These intangibles often referred to as intellectual capital are an organisation’s knowledge-based assets that are a source of competitive advantage (Kweh et al , 2019; Ahmed et al , 2019; Ferramosca and Ghio, 2018; Dzenopoljac et al , 2017; Al-Musali and Ismail, 2014). Hence, intellectual capital management is a key function of the value creation process and performance improvement, which is an essential goal of any business (Campanella et al , 2014; Gigante, 2013).…”

Intellectual Capital and its Reflection on Quality of Productivity

“…The basic elements that relate to employees, management, and customers include human and structural capital. There is a growing interest in economic institutions to invest in intellectual capital to reach the achievement of outstanding performance (Ahmed, Khurshid & Yousaf 2019). The results depicted the statistically significant relationship between investing in intellectual capital and achieving outstanding performance within the economic institutions.…”

The impact of customer capital on company's market value: An empirical study from 100 U.S. stock market leaders

“…There are researchers whose works are dedicated to the problem of establishing the impact of intangibles on the company's MV, in particular, factors such as intellectual capital [Chen et al, 2005;Tseng and Goo, 2005;Maditinos et al, 2011;Khangah et al, 2012;Berzkalne and Zelgalve, 2014;Bchini, 2015;Nimtrakoon, 2015;Nuryaman, 2015;Sardo and Serrasqueiro, 2017;Ahmed et al, 2019;Forte et al, 2019;Mačerinskienė and Survilaitė, 2019], intangible assets [Shahman, 2004;Volkov and Garanina, 2008;Behname et al, 2012;Ramirez and Hachiya, 2012;Shih, 2013;Castro, 2014;Jaara and Elkotayni, 2016;Glova and Mrazkova, 2018;Ocak and Findik, 2019;Vasconcelos et al, 2019], and goodwill [Chauvin and Hirschey, 1994;Shahman, 2004;Li et al, 2010;Cole, 2012]. Only one article related directly to the main focus of our study explores the relationship between customer capital and the company's MV [Taghieh et al, 2013].…”