Intellectual capital in tangible intensive firms: the case of Brazilian real estate companies

Abstract

Purpose-The purpose of this paper is to clarify whether value created by real estate (RE) companies (tangible intensive firms) can be evaluated better using intellectual capital (IC) elements (human, structural and physical assets) or traditional accounting measures of efficiency (ROIC and profit margins). Design/methodology/approach-Correlations and cross-sectional OLS regressions with robust standard errors were used to find relationships between variables explaining value creation. Data were collected from 2007 to 2011 for Brazilian RE firms. To measure market risk, the authors used a new approach to deal with low liquidity. VAIC and I j ratios were used as IC proxies even though both have limitations. Findings-IC has a significant inverse relationship with market value. The more valuable companies showed lower levels of IC except for CEE which explains value as much as ROIC. Also, IC does not influence market risk caused by size and leverage and does not explain ROIC. Research limitations/implications-The limitations of this study result from time and proxy variables. IC was measured by a VAIC model using data from a period of intense volatility. To increase the robustness of the conclusions, other variables should be used as proxies for IC and the results compared. The VAIC model has certain deficiencies in measuring IC. Practical implications-Managers and investors in the RE sector need to change the way they create value and measure value creation. The low level of HC explaining either ROIC or market value is a signal of low innovation which, combined with high CEE, induces a short-term outlook. Originality/value-This study opens discussion of IC in the Brazilian RE sector. A new methodology for identifying value creation is necessary for better evaluation and determining the fair value of firms.

Intellectual capital and bank profitability: New evidence from Vietnam

“…This suggests that a positive effect of VAIC well beyond depends on the efficient utilization of intangible resources, which are difficult to manage. Nonetheless, this supports the findings of Pitelli Britto et al (2014) in Brazil and Haris et al (2019) in Pakistan. When examining the effect of interaction between bank ownership and VAIC, the coefficient of VAIC*OWNER is positive and significant.…”

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

“…However, literature has provided mixed evidence about the impact of SCE on performance. Previously, some researchers reported a positive relationship [6,12,33,52,74,81,92,93] and some reported an insignificant relationship between SCE and performance [32,34,39,58,68,69,71,72,75]. Thus, based on the theories and literature, we pose our hypothesis: Hypothesis 4.…”

“…Their study concluded that the financial institutions in Pakistan are capable, up to a certain level, of generating value and sustaining competitive advantage through their IC and financial capital resources. Previously, Britto, Monetti and Lima Jr [81] used VAIC and also found a nonlinear relationship between IC and performance. In this study, the VAIC and MVAIC are used as the measures of IC performance.…”

“…They also found that only CEE influenced ATO significantly. Using a sample of 31 Brazilian firms over the period 2007-2011, Britto, et al [81] applied OLS regression and found a positive impact of VAIC and its components, i.e., CEE, HCE, and SCE, on financial performance. Their study further argued that IC plays a negative role in explaining the value creation.…”

Nexus Between Intellectual Capital and Financial Performance: An Investigation of Chinese Manufacturing Industry

“…However, Firer and Williams (2003) failed to find any significant relationship between IC components and profitability. Using the data from Brazilian real estate companies, Britto, Monetti, and Lima (2014) found that IC has a negative impact on market value.…”