Asian Journal of Management

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Intellectual Capital Efficiency and Financial Performance of IT Companies in India:A Panel Data Analysis


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1 Department of Commerce, Pondicherry University, Puducherry - 605014, India
     

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This study analyzes the effect of Intellectual Capital Efficiency on firm performance of IT companies in India. NSE-IT index, consisting 10 IT companies was chosen for the study, the ICE was gauged using Value Added (VA) and Value Added Intellectual Coefficient (VAICTM). The study uses secondary data for 10 years from 2007 to 2016 and empirically analyses the relationship of VA, VAICTM and the components of VAICTM with Firm performance indicators (ROA, ROE and NPM) of IT sector. The result of the study reports the presence of a positive relationship among both VAICTM and VA with firm performance indicators. The presence of relationship between components of VAICTM and financial performance indicators shows a positive relationship of Value Added Structural Capital (STVA) with ROA and Net Profit Margin (NPM) but a negative relationship with ROE. Value Added Human Capital (VAHC) shows positive relationship with ROA and negative relationship with ROE. Value Added Capital Efficiency shows no significant relationship with any of the Performance measures.

Keywords

Value Added (VA), NSE-IT Index, Net Profit Margin, Components of Intellectual Capital, Value Added Intellectual Coefficient (VAICTM).
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  • Intellectual Capital Efficiency and Financial Performance of IT Companies in India:A Panel Data Analysis

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Authors

N. Niyas
Department of Commerce, Pondicherry University, Puducherry - 605014, India
V. Kavida
Department of Commerce, Pondicherry University, Puducherry - 605014, India

Abstract


This study analyzes the effect of Intellectual Capital Efficiency on firm performance of IT companies in India. NSE-IT index, consisting 10 IT companies was chosen for the study, the ICE was gauged using Value Added (VA) and Value Added Intellectual Coefficient (VAICTM). The study uses secondary data for 10 years from 2007 to 2016 and empirically analyses the relationship of VA, VAICTM and the components of VAICTM with Firm performance indicators (ROA, ROE and NPM) of IT sector. The result of the study reports the presence of a positive relationship among both VAICTM and VA with firm performance indicators. The presence of relationship between components of VAICTM and financial performance indicators shows a positive relationship of Value Added Structural Capital (STVA) with ROA and Net Profit Margin (NPM) but a negative relationship with ROE. Value Added Human Capital (VAHC) shows positive relationship with ROA and negative relationship with ROE. Value Added Capital Efficiency shows no significant relationship with any of the Performance measures.

Keywords


Value Added (VA), NSE-IT Index, Net Profit Margin, Components of Intellectual Capital, Value Added Intellectual Coefficient (VAICTM).

References