Intellectual capital and financial performance: A comparative study

Shahid Ali; Ghulam Murtaza; Martina Hedvicakova; Junfeng Jiang; Muhammad Naeem

doi:10.3389/fpsyg.2022.967820

Intellectual capital and financial performance: A comparative study

Front Psychol. 2022 Aug 23:13:967820. doi: 10.3389/fpsyg.2022.967820. eCollection 2022.

Authors

Shahid Ali¹, Ghulam Murtaza², Martina Hedvicakova³, Junfeng Jiang¹, Muhammad Naeem⁴

Affiliations

¹ School of Management Science and Engineering, Nanjing University of Information Science and Technology, Nanjing, China.
² Department of Commerce, The Islamia University of Bahawalpur, Bahawalpur, Pakistan.
³ Department of Economics, Faculty of Informatics and Management, University of Hradec Králové, Hradec Králové, Czech Republic.
⁴ Department of Business Administration, Iqra University, Islamabad, Pakistan.

Abstract

Intellectual Capital (IC) is a driving force behind the financial performance of non-financial firms. Investing in intellectual and physical capital allows companies to optimize their financial performance by maximizing resource utilization. This study aims to determine whether IC efficiency impacts the financial performance of listed Pakistani and Indian companies between 2010 and 2020. Return on Assets (ROA) and Return on Equity (ROE) are used to calculate financial performance, and IC is calculated using the modified Value-Added Intellectual Coefficient (MVAIC) model. Regression analysis is performed using the STATA software developed by the South Texas Art Therapy Association. Human Capital (HC), Structural Capital (SC), and Capital Employed (CE) have a significant impact on Pakistani and Indian firms' financial performance. Resource-based theory (RBT) supports these findings. The findings should provide management with a prompt to improve financial performance and emphasize the importance of IC. A rare study has addressed the impact of IC on firm financial performance using the MVAIC model, rather than the VAIC model, in Pakistan and India.

Keywords: capital employed; financial performance; human capital; intellectual capital; structural capital; value-added intellectual coefficient.