Intellectual capital performance of quoted banks on the Istanbul stock exchange market

Abstract

PurposeThe purpose of the paper is to obtain measure of the intellectual capital (IC) performance of quoted banks on the Istanbul Stock Exchange Market (ISE) in Turkey for the period 1995‐2004 and test the effect of the intellectual capital performance on profitability.Design/methodology/approachData required for calculating intellectual capital efficiencies were obtained from the ISE for the period 1995‐2004. The authors measured the intellectual capital performance of quoted banks in ISE using the efficiency coefficient, called Value Added Intellectual Coefficiency (VAICTM), and tested the effect of this intellectual capital performance on profitability using Data Envelopment Analysis (DEA). In addition, three different portfolios were constructed based on three different inputs to observe the effect of the intellectual capital on investors' behavior.FindingsThe effect of intellectual capital on profitability on the banking sector on the ISE was calculated as 61.3 percent on average and Portfolio‐1, which uses the intellectual capital measure as an input, yields the highest returns among the three portfolios constructed.Research limitations/implicationsThe study was applied only to quoted banks on the ISE for the period 1995‐2004.Practical implicationsThe findings allow the banks to benchmark themselves based on the level of IC efficiency ranking, which is important for the banking sector to develop a strategic plan for their future performance. It may also be deduced that intellectual capital is an important factor for investors.Originality/valueThis paper can be considered as one of the most comprehensive studies on testing the effect of intellectual capital performance on profitability in the banking sector using both VAIC and DEA.

Intellectual Capital Performance of the Commercial Banking Sector of Malawi

“…The study has also provided confirmatory evidence of the dominance of human capital efficiency to the value of VAIC TM consistent with other prior studies (Mohiuddin et al, 2006;Mavridis, 2005;Goh, 2005;Kamath, 2007;Muhammad & Ismail, 2009;Joshi et al, 2010). The study has indicated that human capital efficiency scores over the study period contributed about two thirds to the value of VAIC TM , thus suggesting that human capital is very important factor than physical capital for banks (Yalama and Coskun, 2007). The results assent to the fact that although physical capital is essential for banks to operate, it is the intellectual capital that determines the quality of services provided to customers (Goh, 2005).…”

“…Mondal and Ghosh (2012) described intellectual capital as "intangible assets or intangible business factors of the company, which have a significant impact on its performance and overall business success, although they are not explicitly listed in the balance sheet (if so, then under the term goodwill)." According to Yalama and Coskun (2007) intellectual capital is "something which already exists in a firm but cannot be seen on its balance sheet exactly, a competitive advantage over the firm's competitors, future values and includes all its intangible assets, the value of knowledge, information, intellectual property and experience, a key factor influencing the future value of the firm." Cabrita and Vaz (2005) simply stated that intellectual capital is a matter of creating and supporting connectivity between all sets of expertise, experience and competences inside and outside the organization.…”

Impact of intellectual capital on financial performance in the pharmaceutical industry in Iran

“…For example, although some researchers [23,8,25] emphasized the role of intellectual capital in explaining the difference between book and market values of companies, the current study, like some similar studies [15,14,10], has not find any signs regarding the relationship between intellectual capital and market value of companies. On the other hand, as some researchers [34,30,26,17,12,10] confirm the role of intellectual capital in explaining the profitability, the current study also showed the mentioned relationship. This study includes significant themes for practitioners and managers of pharmaceutical companies and researchers who are interested in the topic of intellectual capital.…”

The Mediating Effect of Financial Performance on the Relationship between Shariah Supervisory Board Effectiveness, Intellectual Capital and Corporate Social Responsibility, of Islamic Banks in Gulf Cooperation Council Countries

“…Al-Matari, et al, 2014,Byrd & Hickman, 1992Chen et al, 2005;Drobetz et al, 2003;Gazor et al, 2013;Hossain et al, 2000;Ku Ismail & Abdul Karem, 2011;Jafari, 2013;Ping et al, 2006;Kujansivu & Lonnqvist, 2007;Mahoney & Roberts, 2002;Nazari & Herremans, 2007;Oliver & Porta, 2006;Rosenstein & Wyatt, 1990;Waddock & Graves, 1997;Yalama & Coskun, 2007) have used return on asset (ROA) and return on equity (ROE) as a measure of financial performance either alone or in addition to other measures in their studies of the influence of intellectual capital and corporate governance of firms Return on asset (ROA) is calculated by dividing net income by total assets whereas return on equity (ROE) is calculated by dividing net income by total equity.…”