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Does VAIC affect the profitability and value of real estate and infrastructure firms in India? A panel data investigation

Harish Kumar Singla ( School of General Management , National Institute of Construction Management and Research , Pune, India)

Journal of Intellectual Capital

ISSN: 1469-1930

Article publication date: 21 February 2020

Issue publication date: 3 June 2020

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Abstract

Purpose

This study aims to investigate whether intellectual capital (IC) and its subcomponents enhance value and improve the profitability of real estate (RE) and infrastructure (INF) firms in India. In this study, IC is measured through the value-added intellectual coefficient (VAIC) model. The study further extends the VAIC model by incorporating an additional component of social welfare efficiency (SWE).

Design/methodology/approach

The study uses the panel data investigation based on the data of 63 firms (22 RE and 41 INF firms), for a period of 10 years (2008–2017). The dependent variables in the study are return on assets (ROA) and market price to book value ratio (PB), whereas the independent variables are VAIC and its components. The panel is tested for stationarity, heteroscedasticity and multicollinearity problems. Finally, to account for heteroscedasticity and endogeneity, Arellano and Bond's (1991) panel regression estimator with robust estimates are used.

Findings

The findings of the study suggest that IC has a significant influence on the profitability and value of infra firms, whereas capital-employed efficiency (CEE) positively affects the profitability of both RE and INF firms.

Originality/value

The study is an attempt to find the effect of IC and its components on profitability and value of RE and INF firms in India. The author has also extended the VAIC model, which was introduced by Pulic (2000), by adding an additional IC component, i.e. SWE. The study uses Arellano and Bond's (1991) panel regression estimator with robust estimates, which helps produce robust results.

Keywords

Citation

Singla, H.K. (2020), "Does VAIC affect the profitability and value of real estate and infrastructure firms in India? A panel data investigation", Journal of Intellectual Capital, Vol. 21 No. 3, pp. 309-331. https://doi.org/10.1108/JIC-03-2019-0053

Publisher

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Emerald Publishing Limited

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