Journal of Commerce and Accounting Research

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

Impact of Intellectual Capital on Performance of Indian Corporate Sector


Affiliations
1 Haryana School of Business, Guru Jambheshwar University of Science & Technology, Hisar.
     

   Subscribe/Renew Journal


The study attempts to examine the relationship between corporate intellectual capital and it components with return on equity and market valuation of the Indian companies. Intellectual capital is calculated through Value Added Intellectual Co-efficient (VAICTM) developed by Public. Companies from two major indices of NSE namely S&P CNX Nifty and CNX Nifty Junior are taken as sample for the study with a time period of ten years i.e. 2000-01 to 2009-10. The study concludes that intellectual capital is negatively associated with the market valuation but not with return on equity.

Among the components of intellectual capital, only human capital is found to be associated with the market to book value of the companies. Physical capital efficiency observed as the dominating element for return on equity. Results of the study may be useful to Indian corporate sector to realize and measure the importance of corporate intellectual capital. There is a need to put more efforts from managers to actually report the information on intellectual capital so that investors can actually use it in taking decision regarding actual worth of the company.


Keywords

Corporate Intellectual Capital, S&p Cnx Nifty, Cnx Nifty Junior, Market Valuation, Return on Equity.
Subscription Login to verify subscription
User
Notifications
Font Size


  • Abeysekera, I. & Guthrie, J. (2003). “How is Intellectual Capital Being Reported in a Developing Nation?", Accounting and Accountability in Emerging and Transition Economies, Supplement 2, 149-165.

  • Bontis, N. (2001). “Assessing knowledge Assets: A Review of the Models Used to Measure Intellectual Capital", International Journal of Management Reviews, 3 (1), 41-60.

  • Bontis, N., Dragonetti, N.C., Jacobsen, K. & Roos, G. (1999). “The Knowledge Toolbox: A Review of the Tools Available to Measure and Manage Intangible Resources", European Management Journal, 17 (4), 1-20.

  • Bower, D.J. & Sulej, J. (2006). “Social and Intellectual Capital Formation in Leading Indian Pharmaceutical Companies", International Journal of Innovation Management, 10 (4), 407-423.

  • Bozzolan, S., Favotto, F. & Ricceri, F. (2003). “Italian Annual Intellectual Capital Disclosure: An empirical analysis", Journal of Intellectual Capital, 4 (4), 543-558.

  • Chen, M., Cheng, S. & Hwang, Y. (2005). “An Empirical Investigation of the Relationship between Intellectual Capital and Firms’ Market Value and Financial Performance", Journal of Intellectual Capital, 6 (2), 159-176.

  • Choong, K.K. (2008). “Intellectual capital: Definitions, Categorization and Reporting Models", Journal of Intellectual Capital, 9 (4), 609-638.

  • Firer, S. & Stainbank, L. (2003). “Testing the Relationship Between Intellectual Capital and a Company’s Performance: Evidence from South Africa", Meditori Accountancy Research, 11, 25-44.

  • Firer, S. & Williams, S.M. (2003). “Intellectual Capital and Traditional Measures of Corporate Performance", Journal of Intellectual Capital, 4 (3), 348-360.

  • Gan, K. & Saleh, Z. (2008). “Intellectual Capital and Corporate Performance of Technology-Intensive Companies: Malaysia evidence", Asian Journal of Business and Accounting, 1 (1), 113-130.

  • Garcia-Meca, E. (2005). “Bridging the Gap Between Disclosure and Use of Intellectual Capital Information", Journal of Intellectual Capital, 6 (3), 427-440.

  • Ghosh, S. & Mondal, A. (2009). “Indian software and Pharmaceutical Sector IC and Financial Performance", Journal of Intellectual Capital, 10 (3), 369-388.

  • Guthrie, J., Petty, R. & Johanson, U. (2001). “Sunrise in the knowledge Economy: Managing, Measuring and Reporting Intellectual Capital", Accounting, Auditing & Accountability Journal, 14 (4), 365-382.

  • Guthrie, J., Petty, R. & Ricceri, F. (2006). “The Voluntary Reporting of Intellectual Capital: Comparing Evidence from Hong Kong and Australia", Journal of Intellectual Capital, 7 (2), 254-271.

  • Kamath, G.B. (2007). “The Intellectual Capital Performance of Indian Banking Sector", Journal of Intellectual Capital, 8 (1), 96-123.

  • Kamath, G.B. (2008). “Intellectual Capital Disclosure in India: Content Analysis of ‘TecK’ Firms", Journal of Human Resource Costing & Accounting, 12 (3), 213-224.

  • Maditinos, D., Chatzoudes, D., Tsairidis, C. & Theriou, G., (2011). “The Impact of Intellectual Capital on Firms’ Market Value and Financial Performance", Journal of Intellectual Capital, 12 (1), 1469-1930.

  • Makki, M.A.M., Lodhi, S.A. & Rahman, R. (2008). “Intellectual Capital Performance of Pakistani Listed Corporate Sector", International Journal of Business and Management, 3 (10), 45-51.

  • Muhammad, N.M.N. & Ismail, M.K.A. (2009). “Intellectual Capital Efficiency and Firm’s Performance: Study on Malaysian Financial Sectors", International Journal of Economics and Finance, 1 (2), 206-212.

  • Petty, R., Ricceri, F. & Guthrie, J. (2008). “Intellectual Capital: A User’s Perspectives", Management Research News, 31 (6), 434-447.

  • Pulic, A. (1998). “Measuring the Performance of Intellectual Potential in Knowledge Economy", Available online at http://www.vaic-on.net/start.htm assessed on 15th February 2011.

  • Pulic, A. (2000). “MVA and VAICTM Analysis of Randomly Selected Companies from FTSE 250", Available online at http://www.vaic-on.net/start.htm assessed on 12th May 2010.

  • Sanchez, P., Chaminade, C. & Olea, M. (2000). “Management of Intangibles – An Attempt to Build a Theory",. Journal of Intellectual Capital, 1 (4), 312 – 327.

  • Sriram, R.S. (2008). “Relevance of Intangible Assets to Evaluate Financial Health", Journal of Intellectual Capital, 9 (3), 351-366.

  • Tan, H.P., Plowman, D. & Hancock, P. (2007). “Intellectual Capital and Financial Returns of Companies", Journal of Intellectual Capital, 8 (1), 76-95.

  • Tin, I.W.K. & Lean, H.H. (2009). “Intellectual Capital Performance of Financial Institutions in Malaysia", Journal of Intellectual Capital, 10 (4), 1469-1599.

  • Tobin, J. (1969). “A General Equilibrium Approach to Monetary Theory", Journal of Money, Credit and Banking, 1 (1), 15-29.

  • Villalonga, B. (2004). “Intangible Resources, Tobin’s q and Sustainability of Performance Differences", Journal of Economic Behavior & Organization, 54, 205-230.

  • Wang, W. & Chang, C. (2005). “Intellectual Capital and Performance in Causal Models: Evidence from the Information Technology Industry in Taiwan", Journal of Intellectual Capital, 6 (2), 222-236.

  • Zeghal, D. & Maaloul, A. (2010). “Analysing Value Added as an Indicator of Intellectual Capital and its Consequences on Company Performance", Journal of Intellectual Capital, 11 (1), 39-60.

  • Zhang, J., Zhu N. & Kong, Y. (2006). “Study on Intellectual Capital and Enterprise’s Performance-Empirical Evidence from the Chinese Securities Market", Journal of Modern Accounting and Auditing, Oct., 2 (10), 35-39.


Abstract Views: 624

PDF Views: 0




  • Impact of Intellectual Capital on Performance of Indian Corporate Sector

Abstract Views: 624  |  PDF Views: 0

Authors

Sushila Soriya
Haryana School of Business, Guru Jambheshwar University of Science & Technology, Hisar.
Karam Pal Narwal
Haryana School of Business, Guru Jambheshwar University of Science & Technology, Hisar.

Abstract


The study attempts to examine the relationship between corporate intellectual capital and it components with return on equity and market valuation of the Indian companies. Intellectual capital is calculated through Value Added Intellectual Co-efficient (VAICTM) developed by Public. Companies from two major indices of NSE namely S&P CNX Nifty and CNX Nifty Junior are taken as sample for the study with a time period of ten years i.e. 2000-01 to 2009-10. The study concludes that intellectual capital is negatively associated with the market valuation but not with return on equity.

Among the components of intellectual capital, only human capital is found to be associated with the market to book value of the companies. Physical capital efficiency observed as the dominating element for return on equity. Results of the study may be useful to Indian corporate sector to realize and measure the importance of corporate intellectual capital. There is a need to put more efforts from managers to actually report the information on intellectual capital so that investors can actually use it in taking decision regarding actual worth of the company.


Keywords


Corporate Intellectual Capital, S&p Cnx Nifty, Cnx Nifty Junior, Market Valuation, Return on Equity.

References