The Effects of Intellectual Capital on Financial Performance and Market Value: Evidence from Turkey

Abstract

In this study we aim to examine the effects of intellectual capital and its components on companies' market value and financial performance in Turkey. The financial and market data of production companies listed in Borsa Istanbul 100 index (BIST-100) for the periods 2011 through 2014 are used as dataset. We selected three different measures for financial performance; ROA, ROE and Net Profit Margin, and one measure for market value; Market to Book Ratio. As independent variables, we firstly took Modified Value Added Coefficient (M-VAIC), secondly we took three components of M-VAIC. Besides, we added natural logarithm of assets to control for variation in asset size of companies and tested its significance. The results suggest multi factor models are more powerful than single factor model in explaining the market performance and financial performance. The paper also reveals that models explaining financial performance provide more accurate results than the models of market performance. The analysis also exposes that physical capital and human capital has a significant effect on financial performance whereas physical capital and relational capital has an influence on market performance.

The Effects of Intellectual Capital on Firm Performance of Industrial Sector in Jordan

“…Overall models are significance, nevertheless, its ability to explain the overall variability in the M/B ratio is low; about 5.64%, and EPS 39.13%. Previous studies also found insignificant between M/B and HCE and SCE (Yilmaz & Acar, 2018). The findings contradict previous studies, (Smriti & Das, 2017;Ghosh & Maji, 2015; indicate a positive relationship between HCE and M/B ratio.…”

The Effect of Relational Capital on the Intellectual Capital and Firm Performance Nexus: Evidence From the Jordanian Industrial Sector

“…Based on regression analysis, the results in Model 1 indicate that VAIC TM has a positive effect on firm performance indicator (M/B), thereby supporting H1. When RCE is entered into the model 3, the results reveal that RCE also have a positive impact on M/B, which supports previous studies (Ulum et al, 2014(Ulum et al, , 2017Yilmaz & Acar, 2018)which is between -21.41 until 5.20. Based on M-VAIC scores, performance of IC is classified into four, namely Top Performers, Good Performers, Performers Common, and Bad Performers.…”

“…Hence, multicollinearity appears not to be a serious concern in this study. The results of correlation analysis are consistent with the results in Dženopoljac et al (2016); Dzenopoljac et al(2017); Ozkan et al (2017); Yilmaz & Acar (2018) and Zulkifli et al (2017), but differ from Smriti & Das (2017).…”

“…Table 5 shows the results from the panel data regression that employed the fixed effects model after Breusch and Pagan Lagrangian multiplier and Hausman test analysis were carried out. These models have been applied by many previous studies such as Amin & Aslam (2017);Frazier et al (2004); Haan et al (2016); Han & Li (2015); Hsu & Wang (2012); Sardo et al (2018); Tayles et al(2007) and Zeglat & Zigan (2013. Previous studies reported a positive relationship between RCE and M/B (Ulum et al, 2014(Ulum et al, , 2017Yilmaz & Acar, 2018), but on the other hand, there are studies that found insignificant relationship between RCE and M/B (Nimtrakoon, 2015). Model 5 presents the influence of interaction term RCE*VAIC TM on M/B.…”

Diversity in Estimates of the Impact of Intellectual Capital on Firm Performance Created by Varied Adoptions of <i>VAIC</i> Method

“…Chen, Cheng, and Hwang (2005), Nazari and Herremans (2007) and Tan, Plowman, and Hancock (2007) have emphasised that IC measures are still in an exploratory stage and a coherent measuring technique for IC has not been formulated yet. However, the Value Added Intellectual Coefficient (VAIC) method has gained recognition as the most efficient (Chan, 2009), and widely adopted (Zhicheng et al, 2016;Yilmaz & Acar, 2018) measure amongst an array of measures (see Table 1) available to value IC.…”