The Efficiency Of Intellectual Capital Investments As A Potential Leading Indicator

Abstract

This paper aims to test the VAIC model in order to explore and recognize the relationship between Intellectual Capital (IC) components and the financial performance of companies, with an ambition to establish whether IC investment efficiency indicators can serve as potential leading indicators of the future financial performance of companies. We test our hypotheses by using the VAIC model. The data set includes more than 12,000 Slovenian companies within a 14-year period (from 1995 to 2008). OLS regression and panel regression method are used as tools. Most of the research hypotheses have been confirmed, but the results are of limited practical use. In contrast to the primary test, our test conducted on the ranked data indicates a high degree of correspondence between the improvement in rank of a companys IC investment efficiency and the improvement in rank of its financial performance in the peer group. As IC value is a result of above-average financial performance, the IC investment efficiency can potentially serve as leading indicators of future financial performance. By comparing the results of similar studies, we indicate possible systematic biases as potential sources of differences in the results, and suggest the areas that need further investigation.

The Influence of Intellectual Capital Performance on Value Creation in Slovak SMEs

“…So far, researchers have investigated the relationship among VAIC™-based measures and overall performance measures (such as ROA, ROE etc.) with inconsistent results (Javornik et al 2012;Iazzolino and Laise 2013). Thus, additional research is necessary to further clarify these results.…”

“…Whereas some of the results are ambiguous (Javornik et al 2012;Iazzolino and Laise 2013), many studies have confirmed positive relationship of intellectual capital and firm performance (e.g. Chen et al 2005;Clarke et al 2011;Alipour 2012;Mondal and Ghosh 2012;Pilkova et al 2013;Holienka and Pilkova 2014).…”

Effect of Intellectual Capital on Performance with Islamic Work Ethics as a Moderating Factor

“…[10]. This research are different with [11]. As IC value Advances in Social Science, Education and Humanities Research, volume 409 is a result of above-average financial performance, the IC investment efficiency can potentially serve as leading indicators of future financial performance 2) Effect of Intellectual Capital on financial performance with Islamic work ethics as moderating variables: Based on the results of the MRA regression calculation the regression coefficient values for the Interaction of Intellectual Capital (IC) and Islamic Work Ethics (IC.EKI) (β3) amounting to -0,000257.…”

The Relationship Between the Intellectual Capital Disclosure and Cost of Debt Capital – A Case of Slovenian Private Audited Organisations

“…According to the Slovenian Companies Act (ZGD-1) in force during the 13 Few others studies (Nemec Rudež & Mihalič, 2007;Jerman et al, 2010;Javornik et al, 2012;Jerman, 2013) examined period of time, the annual reports of all large and medium-sized capital companies, dual companies and those small capital companies whose securities are traded on the regulated market had to be audited and submitted to AJPES to be available to general public…”