The Nexus between Intellectual Capital and Firm's Financial Performance: ACE Market Vantage Point

Abstract

This paper aims to examine the impact of Intellectual Capital (IC) on a firm's financial performance in the ACE Market of Bursa Malaysia. In the era of the knowledge economy, intellectual capital is considered the dominant factor in contributing to superior performance. Hence, there is an emerging emphasis on intangible assets, and wealth creation is allied with the development and maintenance of intangible resources. The empirical data was covering 81 firms from 2009-2018. This study used the Modified Value-Added Intellectual Capital Model (MVAIC) to measure intangibles by applying a two-step system generalized method of moments (GMM). The result revealed that the MVAIC is significantly related to ROA negatively. It means that MVAIC can predict the future of financial performance and its effect negatively. The results extend the understanding of the role of intellectual capital in creating corporate values and building sustainable advantages for companies in developing countries like Malaysia. Therefore, this research suggests that in the future, studies on intellectual capital and a firm's financial performance should apply dynamic panel and MVAIC model in a broad scope not only specific to the knowledge-based industry. As the importance of intellectual capital is not only limited to knowledge-based industries.

Examining the Influence of Macroeconomic Factors and Corporate Governance on Firm Performance in the ACE Market

“…This fosters economic growth by providing smaller companies the opportunity to thrive. Bursa Malaysia's significance in capital formation and as a venue for IPOs further emphasizes its crucial role in supporting Malaysia's economic progress (Saddam et al, 2021). However, the performance of ACE market companies is impacted by various macroeconomic and corporate governance factors, posing challenges for the whole market.…”