Intellectual capital and corporate performance a value creation
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Transcript of Intellectual capital and corporate performance a value creation
Intellectual Capital And Corporate Performance- A Value Creation Efficiency Analysis
Introduction
“Intellectual capital”, as a term, has been commonly utilized in the current times in the field of research in the context of the developed world. Unfortunately, studies in the emerging economies concerning intellectual capital, specifically the evaluation of its implications for particular industries are few and far between. The widening gap between firms market and book value has obliterated the wide research attention concerning the invisible value that has been deleted from financial statements. It is commonly noted that the market value is well over the book value and in most current companies; intellectual capital occupies the most part of their market value.
Sampling plan
Convenience sampling technique is used to select the sample companies. Data for the study were generated from a sample of 35 technology intensive company including the one where we’ve completed our report. Among these 35 companies there are eight (28) Pharmaceuticals & Camical Company, seven (7) cement manufacturing company all are the DSE listed company
Measurement of variable
Dependend Variable
Return on Assets
Asset Turnover
Market-to-Book Value
Measurement of variable (Cont.)
Dependent variable The traditional measures of financial performance in this study are based on accounting measures, despite the susceptibility of its use. In this study, return on assets (ROA) is used as the measure of profitability, where:
o Return on Assets (ROA): Ratio of net income divided by book value of the total asset
o Asset Turnover (ATO): ratio of total revenue to book value of assets o Market-to-Book Value (M/B) ratios of equity: Market-to-book Value is the total
market capitalization to the book value of the net asset o Market value of common stock: No of share outstanding × Stock price at the end
of year o Book value of common stocks: Book value of shareholders‟ equity
Measurement of variable (Cont.)
Independent variable Value Added Intellectual Coefficient (VAIC) Human capital efficiency Structural capital efficiency Capital employed efficiency
Measurement of variable (Cont.)
Independent variable Value Added Intellectual Coefficient (VAIC) VAIC measures how effectively immobilized capital and intellectual capital contribute to the creation of business value for the firm, taking into consideration three main elements: human capital, structural capital, and physical capital. VAIC™ = (ICE + CEE)ICE is Intellectual capital efficiency and CEE is Capital employed efficiency. ICE = HCE + SCE HCE = Human capital efficiency, SCE = Structural capital efficiency
ROI Return on investment
ROA Return on asset
M/B Market-to-Book ratio
Ratio operating income and the invested capital
Ratio the net income before interest and the invested capital
Ratio between market value and book value
Performance indicators used in the empirical analysis
Descriptive statistics
N Mean Std. DeviationVariance
Independent variable Value added human capital coefficient; Ratio of total value added divided by total amount of salary and wages spent by firm for its employees
HCE
170 .4459 1.50195 2.255
Value added structural capital coefficient; Ratio of firm‟s structural capital divided by total value added.
SCE 170 .5598 1.50175 2.4079
Value added physical capital coefficient, Ratio of total value added divided by total amount of capital employed
CEE168 .5406 3.24895 10.555
Total Value added intellectual capital; Sum of CEE, HCE and SCE
VAIC 170 1.5398 3.23003 10.4330
Dependent variables Market valuation
Ratio of the firm‟s market capitalization to book value of the net asset
MB
170 27.5949 157.1596824699.165
Productivity: Ratio of total turnover to total asset ATO 170 .8570 .97610 0.9527Profitability: Ratio of net income to total asset ROA 170 4.0437 8.42996 71.064
Valid N (listwise) 168
Correlation Analysis Correlations
ROA ATO MB CEE HCE SCE VAIC
ROA Pearson Correlation 1 .031 .276** -.035 -.075 .074 -.036
Sig. (2-tailed) .685 .000 .653 .330 .337 .639
N 170 170 168 170 170 170
ATO Pearson Correlation 1 -.024 .043 .101 -.100 .044
Sig. (2-tailed) .757 .579 .188 .193 .571
N 170 168 170 170 170
MB Pearson Correlation 1 -.018 -.046 .045 -.019
Sig. (2-tailed) .821 .552 .556 .808
N 168 170 170 170
CEE Pearson Correlation 1 -.031 .030 1.000**
Sig. (2-tailed) .692 .695 .000
N 168 168 168
HCE Pearson Correlation 1 -1.000** -.019
Sig. (2-tailed) .000 .810
N 170 170
SCE Pearson Correlation 1 .019
Sig. (2-tailed) .809
N 170
VAIC Pearson Correlation 1
Sig. (2-tailed)
N
**. Correlation is significant at the 0.01 level (2-tailed).
Linear Multiple Regression results: Model 1
Market Valuation
Model 2 Profitability
Model 3 Productivity
N 170 170 170R (predictors) .019 .036 .044F-Statistics .059 .220 .322Significance .808 .639 .571 t-stat t-stat t-statIntercept 2.165 5.832 10.062VAIC -.244 .000 .000
Linear Multiple Regression results:
Model Market valuation
Model 4Market Valuation
Model 5 Profitability
Model 6 Productivity
N 170 170 170R (Predictors) .042 .085 .124F – (Statistics) .098 .400 .852Significance .961 .753 .467 t-stat t-stat t-statIntercept .284 .783 -.054CEE -.190 -.529 .471HCE -.242 -.481 .605SCE -.204 -.554 .513
ConclusionThis report represent an insight of Intellectual capital and corporate performance of the 35 technology intensive organization listed in DSE among which there are 28 Pharmaceuticals manufacturing company seven cement producing company.It provides the opportunity to initiate with practical acquaintance and implement academic knowledge into practical field. The goal of this analysis is to expose the student in the organizational work situation and provide an opportunity for applying academic learning into reality. There are some difference between theories and practice. Presentation and report making program is such an arrangement by which an intern can face work related complexities and way of resolving such complexities. The research reviews the literature pertaining to the assessment of knowledge assets of the 35 selected companies. Since knowledge assets are the crux of sustainable competitive advantages, the burgeoning field of intellectual capital is an exciting area for both research and practitioners. Unfortunately, the measurement of such intangibles assets is difficult. A variety of models have suffered in an attempt to measure IC and this paper aims to highlight their implication in reality based on the sampled Bangladeshi manufacturing companies.