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Article
Publication date: 26 March 2024

Syed Quaid Ali Shah, Fong Woon Lai, Muhammad Tahir, Muhammad Kashif Shad, Salaheldin Hamad and Syed Emad Azhar Ali

Intellectual capital (IC) is a paramount resource for competitiveness in the knowledge-based financial sectors of the economy. As financial technology advances, specifically in…

Abstract

Purpose

Intellectual capital (IC) is a paramount resource for competitiveness in the knowledge-based financial sectors of the economy. As financial technology advances, specifically in the banking industry, it is vital to understand the effect of IC on financial performance. This study aims to investigate the effect of IC on return on equity (ROE), with a unique emphasis on the moderating role of board attributes. Previous studies have overlooked this moderating role.

Design/methodology/approach

The study sample consists of 17 banks and a panel data set spanning 2016–2021, extracted from annual reports. Antel Pulic’s value-added intellectual coefficient (VAIC) model is used to compute IC. To analyze the data, a generalized least squares analysis is conducted. The robustness of the analysis is ensured by using the two-stage least squares (2SLS) econometric technique.

Findings

The findings indicate that both the VAIC and human capital efficiency (HCE) have a significant impact on the ROE of banks. In terms of moderation, it is observed that board size (BS) exerts a negative effect on the association between VAIC, HCE, structural capital efficiency and ROE. Additionally, BS positively compounds the connection between capital employed efficiency and ROE. Similarly, the presence of independent directors (IND) significantly moderates the effects of VAIC and its components on the ROE of banks in Pakistan.

Practical implications

Banks should focus on the HCE for a higher ROE. Moreover, banks ought to prioritize appointing more independent directors in the boardroom for effective utilization of IC and greater ROE.

Originality/value

The findings of the study, which analyzed data from Pakistan’s banking sector, are original and provide additional insights into the literature on IC and board attributes.

Details

Journal of Islamic Accounting and Business Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0817

Keywords

Open Access
Article
Publication date: 27 November 2023

Wasim Ul Rehman, Omur Saltik, Suleyman Degirmen, Meti̇n Ocak and Hina Shabbir

The purpose of this study is to examine the dynamic relationship between intellectual capital (IC) and its components on financial performance of banks within the selected eight…

Abstract

Purpose

The purpose of this study is to examine the dynamic relationship between intellectual capital (IC) and its components on financial performance of banks within the selected eight countries of Association of Southeast Asian Nations (ASEAN).

Design/methodology/approach

The study utilizes the balanced panel data of 37 publicly listed banks from eight leading ASEAN economies for the period of 2017–2021. In this sense, the authors applied the Ante Pulic's typology, i.e. value-added intellectual coefficient (VAIC™) to evaluate the efficiency of intangible and tangible assets. While, investigating the dynamic nature of relationship, the authors employed the generalized system method of moments because of its power to account for the problem of endogeneity and heteroscedasticity.

Findings

The results of the study demonstrate that banks in ASEAN countries shed a varied degree of a spotlight on VAIC™ and its components to create value. The findings revealed that structural capital efficiency is significantly associated with earning per share (EPS), return on assets (ROA) and return on equity (ROE), compared to human capital efficiency (HCE) and capital employed efficiency of ASEAN banks. These results endorse the importance of resource- and knowledge-based views of organizations to leverage the financial performance of banks. However, contrary to theoretical expectations, this study found no positive relationship between HCE with ROA and ROE. Whereas, the relationship of VAIC™ is positive and significant with EPS and ROE but it remains statistically very marginal.

Research limitations/implications

There are some inherent limitations in this study that could be opportunities for future research. The current study uses the VAIC™ typology, but future researchers can use the modified value-added intellectual coefficient (MVAIC) or triangulation approach to enhance the validity and reliability of the study. Additionally, future research can investigate the similarities and differences among countries in terms of their cultural backgrounds and regulatory frameworks regarding the disclosure of intangibles. Furthermore, future research can increase the length and sample size of the study to enhance its generalizability.

Practical implications

The robust empirical findings extend the academic debate on IC by unveiling the dynamic nature of relationship between IC and financial performance in context of ASEAN banking sector. The findings provide plausible recommendations for policy makers (managers, regulators and stakeholders) to understand how to increase the IC efficiently, especially human capital as a source to evaluate the firms’ ability in determining value-added and financial performance. Further, findings of this study also suggest that how can policy makers get the benefit by investing more on structural capital as a valuable strategic source to guarantee the optimal performance returns.

Originality/value

Prior studies on IC have been country- and firm-specific, utilizing cross-sectional research designs. However, this research contributes to the limited literature by investigating the dynamic nature of the relationship between IC and financial performance of banks in the context of ASEAN countries using micro-panel data.

Details

Arab Gulf Journal of Scientific Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1985-9899

Keywords

Article
Publication date: 7 June 2023

Ali İhsan Akgün and Serap Pelin Türkoğlu

This study aims to reveal to what extent successful European listed firms depend on their intellectual capital investment in achieving business success during the global financial…

Abstract

Purpose

This study aims to reveal to what extent successful European listed firms depend on their intellectual capital investment in achieving business success during the global financial crisis.

Design/methodology/approach

This study used value added intellectual coefficient (VAIC) methodology to measure the effect of intellectual capital on financial performance of business, which consist of 683 the sample listed firms. To examine the nexus between intellectual capital, legal origin and firm performance, estimated panel test and ordinary least squares regression model is used to data obtained from a sample of European countries.

Findings

The finding of this study suggests that there exists a positive relationship between intellectual capital and firm performance with return on assets (ROA) before the financial crisis, while firm performance with return on equity did not contribute to intellectual capital before and after the crisis period. Additionally, common law countries have a positive and statistically significant impact on firm performance with ROA for the before-crisis period, while code law countries have positively significant effect with VAIC on ROA.

Practical implications

The VAIC method has played a critical role in the management decision-making process to integrate the intellectual capital in the financial crisis period.

Originality/value

This study examines intellectual capital components such as human capital, structural capital and process capital efficiencies and firm performance in the legal origin context. The empirical evidence shows that there are significant impacts of legal origin on the nexus between intellectual capital and performance of listed firms during the global financial crisis.

Details

International Journal of Organizational Analysis, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1934-8835

Keywords

Article
Publication date: 16 May 2023

Seh Young Kim and Dai Binh Tran

This paper investigated the relationship between intellectual capital (IC)/its components, and the business performance of Vietnamese small and medium enterprises (SMEs).

Abstract

Purpose

This paper investigated the relationship between intellectual capital (IC)/its components, and the business performance of Vietnamese small and medium enterprises (SMEs).

Design/methodology/approach

The panel data set was obtained from the Vietnam SME database. Using the value-added intellectual coefficient (VAIC) approach for IC measurement, this paper employs various panel data estimation approaches, including fixed effects (FE) and the generalized method of moments (GMM), to examine the relationship between IC and the financial performance of SMEs in Vietnam.

Findings

The result suggests that the value creation activities of SMEs in Vietnam mainly occur on the basis of physical and financial capital. In other words, the findings indicate that Vietnamese SMEs mainly depend on physical and financial capital to profit: they have not fully utilized their human capital and structural capital, two main components of IC for value creation.

Practical implications

The results underline the urgency of effective management of tangible and IC to boost the utilization of human and structural capital to increase the profitability of Vietnamese SMEs. The results lead to suggesting a series of policy recommendations to achieve the objective.

Originality/value

This paper is the first to examine the relationship between IC and the financial performance of SMEs in Vietnam, contributing to the literature on IC in emerging countries.

Details

Asia-Pacific Journal of Business Administration, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1757-4323

Keywords

Article
Publication date: 30 June 2023

Ghassan H. Mardini and Fathia Elleuch Lahyani

This study examines the impact of female directors' representation in the boardroom and the role of institutional ownership (IO) on intellectual capital efficiency (ICE) and its…

Abstract

Purpose

This study examines the impact of female directors' representation in the boardroom and the role of institutional ownership (IO) on intellectual capital efficiency (ICE) and its three efficiency components: human capital efficiency (HCE); innovation capital efficiency (INCE) and capital employed efficiency (CEE).

Design/methodology/approach

A sample of non-financial French firms listed within the Société des Bourses Françaises-120 (SBF-120) was employed for the period from 2011 to 2020 using the generalized method of moments (GMM) approach to test the set of hypotheses.

Findings

Grounded in agency and resource dependence theories, this study found that female directors play a vital role in enhancing ICE. IO also has a significant role to play. Active institutional investors tend to push toward gender-balanced boardrooms and play an external supervisory role to improve efficiency. Moreover, female financial experts on audit committees also contribute to the ICE decision-making process within firms with high IO levels.

Research limitations/implications

This study focused only on IO. Future research may use other forms of ownership, such as foreign or family ownership.

Practical implications

The findings may serve as a reference for managers and policymakers to enhance IC management and make appropriate investment decisions. Managers and policymakers may rely on strategic and effective decisions regarding the efficient use of IC for value creation through the judgments of female directors.

Originality/value

The current study adds significant insights to the accounting and intellectual capital literature.

Details

Journal of Applied Accounting Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0967-5426

Keywords

Article
Publication date: 20 February 2024

Misal Ijaz, Abeera Zarrar and Farah Naz

The purpose of this study is to evaluate the synergy of corporate governance (CG) with intellectual capital (IC) and to assess the moderating effect of profitability indicator on…

Abstract

Purpose

The purpose of this study is to evaluate the synergy of corporate governance (CG) with intellectual capital (IC) and to assess the moderating effect of profitability indicator on the aforementioned synergy using agency theory, resource-based view theory and theory of financial ratios as conceptual frameworks.

Design/methodology/approach

The sample includes 72 companies with a six-year data set drawn from the KSE 100 Index companies of Pakistan. In addition, the study adopts Pulic’s model to compute the efficiency of IC. The research uses fixed-effect panel regression for analysis and two-stage least squares regression (2SLS) to address endogeneity issues in the estimation process.

Findings

The results showcased that chief executive officer duality possesses negligible impact on IC efficiency (ICE), while independent directors, audit committees and board size tend to attain a strong association with IC. Moreover, it postulates that the moderation of return on equity strengthens the path between all governance components and ICE significantly.

Originality/value

The research uses a 2SLS regression analysis to explore how CG practices take hold on the effectiveness of IC in Pakistan while taking into account the moderating impact of profitability. The findings add to the body of knowledge on the value that strong governance practices have on businesses and society.

Details

International Journal of Law and Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1754-243X

Keywords

Article
Publication date: 17 October 2023

Ahmed Mohamed Habib and Nahia Mourad

This study develops a robust model to measure intellectual capital efficiency (ICE). It also analyzes ICE across Gulf companies, sectors and countries.

Abstract

Purpose

This study develops a robust model to measure intellectual capital efficiency (ICE). It also analyzes ICE across Gulf companies, sectors and countries.

Design/methodology/approach

This study uses data envelopment analysis (DEA), the Malmquist productivity index (MPI), difference tests and additional analyses on a dataset consisting of 276 firm-year observations.

Findings

The findings indicate that the study model is robust to additional analysis. The results show significant differences in ICE between firms during the study period and noteworthy differences between countries, where the Qatari and Bahraini firms achieved the best ICE compared to other countries.

Practical implications

The results of this study have significant ramifications for increasing knowledge of ICE analysis models among relevant parties. In addition, the findings may affect trading strategies because investors and financiers are motivated by the potential for lucrative financial returns on their investments in companies that prioritize ICE strategies.

Originality/value

This research contributes to the literature by proposing a robust model for estimating the ICE. It also compares ICE across Gulf companies, industries and countries to shed light on their ICE challenges.

Details

Benchmarking: An International Journal, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1463-5771

Keywords

Article
Publication date: 28 February 2024

Mushahid Hussain Baig, Jin Xu, Faisal Shahzad and Rizwan Ali

This study aims to investigate the association of FinTech innovation (FinTechINN) and firm performance (FP) by considering the role of knowledge assets (KA) as a causal mechanism…

Abstract

Purpose

This study aims to investigate the association of FinTech innovation (FinTechINN) and firm performance (FP) by considering the role of knowledge assets (KA) as a causal mechanism underlying the FinTechINN – FP association.

Design/methodology/approach

In this study, the authors consider panel data of 1,049 Chinese A-listed firm and construct a structural model for corporate FinTech innovation, knowledge assets and firm performance while considering endogeneity issues in analyses over the period of 2014–2022. The modified value added intellectual capital (VAIC) and research and development (R&D) expenses are used as a proxy measure for knowledge assets, considering governance and corporate performance measures.

Findings

According to the findings of this study FinTech innovation (FinTechINN) has a positive significant effect on firm performance. Particularly; the findings disclose that FinTech innovations has a link with knowledge assets, FinTech innovations indirectly affects firm performance, and the association between FinTech innovation and firm performance is partially mediated by knowledge assets (MVAIC and R&D expenses).

Originality/value

Rooted in the dynamic capability and resource-based view, this study pioneers an empirical exploration of the association of FinTech innovation with firm performance. Moreover, it introduces the novel dimension of knowledge assets (on firm-level), acting as a mediating factor with in this relationship.

Details

International Journal of Innovation Science, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1757-2223

Keywords

Article
Publication date: 16 October 2023

Gopalakrishnan Chinnasamy, Araby Madbouly, S. Vinoth and Preetha Chandran

This study aims to identify the impact of intellectual capital (IC) on the bank’s performance using a cross-country approach with India and Gulf Cooperation Council (GCC…

Abstract

Purpose

This study aims to identify the impact of intellectual capital (IC) on the bank’s performance using a cross-country approach with India and Gulf Cooperation Council (GCC) countries using the Skandia navigator model (SNM).

Design/methodology/approach

This study uses a mixed-methods research approach by taking financial and non-financial measures to assess the impact of the IC on the bank’s performance using the SNM. The study implies an analysis of the data from the top ten banks in India and twenty banks in GCC countries. The selection was done based on the volume of the bank’s business for three years (2019–2020, 2020–2021 and 2021–2022).

Findings

The research has three main findings: there is a positive impact of IC on the bank’s performance; amongst the factors of SNM, there is a direct impact of human capital and customer focus on the performance of the selected banks in both India and GCC countries; and the other factors of SNM such as structural capital and process focus, renewal and development focus also affect the selected banks.

Research limitations/implications

The outcomes of the research may be useful for policymakers in India and GCC countries, as it identifies IC components that have a significant impact on the bank’s performance. This might enable them to develop policies that foster such factors, which, consequently, will improve the performance of the banks in the selected countries.

Originality/value

This study is an attempt to fill the gap in the existing literature on IC and bank’s performance for two different types of countries using the SNM.

Details

Journal of Financial Reporting and Accounting, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 5 October 2023

Syaima Binti Adznan, Zulkarnain Bin Muhamad Sori and Shamsher Mohamad

The purpose of this paper is to examine and compare the trend of intellectual capital disclosures (ICD) of Islamic banks under the International Financial Reporting Standards…

Abstract

Purpose

The purpose of this paper is to examine and compare the trend of intellectual capital disclosures (ICD) of Islamic banks under the International Financial Reporting Standards (IFRS) and Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) regimes over a seven-year period (2012–2018).

Design/methodology/approach

A self-developed checklist was developed to measure the extent of ICD practices of Islamic banks in both regimes.

Findings

The results revealed a moderate increase in ICD practices over the period of the study. However, there is no significant difference in ICD between the two financial reporting regimes i.e. IFRS and AAOIFI-based banks. In fact, most of the IFRS-based banks have better ICD than AAOIFI-based banks throughout the analysis period. This study contributed to the ICD literature by introducing Shariah capital as a new category of information to disclose besides the common disclosure on human capital, relational and structural related information by the Islamic banks.

Practical implications

It is important for Islamic banks to distinguish themselves from conventional banks and ICD can be a conduit to show their uniqueness. The introduction of Shariah capital in this study reflects the main objective of Islamic bank’s existence, and it should become an important element in ICD. In fact, some form of guidelines or policy by regulating agencies could facilitate the ICD by Islamic banks and reflect the truth about their ability to capitalize on Intellectual capital and disclose about these practices to their stakeholders.

Originality/value

The introduction of Shariah capital as a new component to the existing components (i.e. human capital, structural capital and relational capital) of intellectual capital brings a new perspective to the research on ICD of Islamic banks. This paper further contributes to the scarce evidence of ICD of Islamic banks globally.

Details

Journal of Islamic Accounting and Business Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0817

Keywords

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