Intellectual capital and profitability in an emerging insurance market
Journal of Economic and Administrative Sciences
ISSN: 1026-4116
Article publication date: 15 May 2017
Abstract
Purpose
The purpose of this paper is to examine the relationship between intellectual capital (IC) and profitability of insurance companies in Ghana.
Design/methodology/approach
Data on 36 life and non-life insurance companies from 2007 to 2011 are employed to estimate the value added intellectual coefficient of Pulic (2004, 2008). Using return on assets and underwriting profit as indicators of profitability, the ordinary least squares panel corrected standard errors of Beck and Katz (2005) is used in estimating the relationship in the presence of serial correlation and heteroskedasticity. Leverage, underwriting risk and insurers’ size are used as control variables.
Findings
Non-life insurers have high IC performance comparative to life insurers. This study finds a significant positive relationship between IC and profitability of insurers in Ghana while human capital efficiency is the main driver of insurers’ IC performance.
Practical implications
The study discusses relevance of IC for management of insurance companies in Ghana and other emerging insurance markets in Africa.
Originality/value
This appears to be the first study to examine the impact of IC on profitability of a developing insurance market in Africa.
Keywords
Citation
Asare, N., Alhassan, A.L., Asamoah, M.E. and Ntow-Gyamfi, M. (2017), "Intellectual capital and profitability in an emerging insurance market", Journal of Economic and Administrative Sciences, Vol. 33 No. 1, pp. 2-19. https://doi.org/10.1108/JEAS-06-2016-0016
Publisher
:Emerald Publishing Limited
Copyright © 2017, Emerald Publishing Limited