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THE IMPACT OF INTELLECTUAL CAPITAL ON FINANCIAL PERFORMANCE AND FIRM VALUE IN ISLAMIC COUNTRIES

Year 2021, , 532 - 555, 21.09.2021
https://doi.org/10.31460/mbdd.830178

Abstract

This study analyzes the effect of intellectual capital (IC) efficiency on firm value and financial performance indicators for companies in Islamic countries. Sample consists of 1,681 firms from eleven Islamic countries, covering eight years between 2010 and 2017. We use value-added intellectual capital (VAIC) methodology and run OLS regressions with panel data. Findings reveal that IC positively affects firm profitability and liquidity, and negatively affects leverage. Furthermore, both IC and the components of IC positively affect firm value. Lastly, Shariah-compliance has a positive impact on firm value, profitability and liquidity and a negative impact on leverage. This is the first study to analyze the effect of IC efficiency on firm value and on financial performance aspects for a very broad sample covering 11 Islamic countries at the same time. Last, this is the first study to investigate the effect of Shariah-compliance on value and financial performance attributes of firms in Islamic countries.

References

  • Akgüç, S. and Rahahleh, N. A. 2018. “Effect of Shariah compliance on operating performance: Evidence from GCC countries”, Emerging Markets Finance and Trade, 54 (12), 2874-2896.
  • Alcaniz, L., Gomez-Bezares, F. and Roslender, R. 2011. “Theoretical perspectives on intellectual capital: a backward look and a proposal for going forward”, Accounting Forum, 35, 04–117.
  • Bolek, M. and Lyroudi, K. 2015. “Is there any relation between intellectual capital and the capital structure of a company? The Case of Polish Listed Companies”, Financial Internet Quarterly, 11, 23–33.
  • Bontis, N. 1999. “Managing organizational knowledge by diagnosing intellectual capital: Framing and advancing the state of the field”, International Journal of Technology Management, 18 (5), 433–462. Bontis, N., Keow, W.C.C. and Richardson, S. 2000. “Intellectual capital and business performance in Malaysian industries”, Journal of intellectual capital, 1 (1), 85–100.
  • Bozbura, F. T. 2004. “Measurement and application of intellectual capital in Turkey”, The Learning Organization, 11 (4/5), 357–367.
  • Busse, M. and Hefeker, C. 2007. “Political risk, institutions and foreign direct investment”, European Journal of Political Economy, 23(2), 397–415.
  • Campisi, D. and Costa, R. 2008. “A DEA-based method to enhance intellectual capital management”, Knowledge and Process Management, 15 (3), 170–183.
  • Chen, M. C., Cheng, S.J. and Hwang, Y. 2005. “An empirical investigation of the relationship between intellectual capital and firms’ market value and financial performance”, Journal of Intellectual Capital, 6 (2), 160–175.
  • Chung, K.H. and Pruitt, S.W. 1994. “A simple approximation of Tobin’s q”, Financial Management, 23, 70–74.
  • Copeland, T. E., Weston, J. F. and Shastri, K. 2009. Financial Theory and Corporate Policy. Pearson-Addison Wesley, New York.
  • Crnigoj, M. and Mramor, D. 2009. “Determinants of capital structure in emerging European economies: Evidence from Slovenian firms”, Emerging Markets Finance and Trade, 45 (1), 72–89.
  • Curado, C., Henriques, L. and Bontis, N. 2011. “Intellectual capital disclosure payback”, Management Decision, 49 (7), 1080–1098.
  • Drucker, P. F. 1988. “The coming of the new organization”, Harvard Business Review, 45-53.
  • Fijałkowska, J. 2014. Value added intellectual coefficient (VAIC™) as a tool of performance measurement. (University of Social Sciences Publishing House)
  • Firer, S. and Williams, S. M. 2003. “Intellectual capital and traditional measures of corporate performance”, Journal of Intellectual Capital, 4 (3), 348–360.
  • Guthrie, J. 2001. “The management, measurement and the reporting of intellectual capital”, Journal of Intellectual Capital, 2 (1), 27–41.
  • Guthrie, J., Ricceri, F. and Dumay, J. 2012. “Reflections and projections: A decade of intellectual capital accounting research”, British Accounting Review, 44 (2), 70-85.
  • Hassan, M. K., Kayed R. N. and Oseni U. A. 2013. Introduction to Islamic banking and finance: principles and practice. Edinburgh Gate, Harlow, England, Pearson Education Limited.
  • Huang, C. and Hsueh, S. 2007. “A study on the relationship between intellectual capital and business performance in the engineering consulting industry: A Path Analysis”, Journal of Civil Engineering and Management, 8, 265–271.
  • Itami, H. and Roehl, T. 1991. Mobilizing Invisible Assets. Harvard University Press.
  • Jensen, M. 1986. “Agency costs of free cash flow, corporate finance, and takeovers”, The American Economic Review, 76 (2), 323–329.
  • Maditinos, D., Chatzoudes, D., Tsairidis, C. and Theriou, G. 2011. “The impact of intellectual capital on firm’s market value and financial performance”, Journal of Intellectual Capital, 12, 132–151.
  • Mehralian, G., Rajabzadeh, A., Sadeh, R.M. and Rasekh, R.H. 2012. “Intellectual capital and corporate performance in Iranian pharmaceutical industry”, Journal of Intellectual Capital, 13 (1), 138–158.
  • Nahapiet, J. and Ghoshal, S. 1998. “Social capital, intellectual capital, and the organizational advantage”, Academy of Management Review, 23 (2), 242–266.
  • Nimtrakoon, S. 2015. “The relationship between intellectual capital, firms’ market value and financial performance: Empirical evidence from the ASEAN”, Journal of Intellectual Capital, 16 (3), 587–618.
  • Oppong, G. K. and Pattanayak, J. K. 2019. “Does investing in intellectual capital improve productivity? Panel evidence from commercial banks in India”, Borsa Istanbul Review, 19 (3), 219-227.
  • Panaretou, A. 2013. “Corporate risk management and firm value: evidence from the UK market”, The European Journal of Finance, 20 (12), 1161–1186.
  • Petty, R. and Guthrie, J. 2000. “Intellectual capital literature review: measurement, reporting and management”, Journal of Intellectual Capital, 1 (2), 155–176.
  • Pulic, A. 1998. Measuring the performance of intellectual potential in knowledge economy, 2nd McMaster Word Congress on Measuring and Managing Intellectual Capital by the Austrian Team for Intellectual Potential.
  • Pulic, A. 2000. “VAIC™–an accounting tool for IC management”, International Journal of Technology Management, 20 (5–8), 702–714.
  • Riahi-Belkaoui, A. 2003. “Intellectual capital and firm performance of US multinational firms: A study of the resource‐based and stakeholder views”, Journal of Intellectual Capital, 4 (2), 215–226.
  • Rizov, M. 2004. “Credit constraints and profitability: Evidence from a transition economy”, Emerging Markets Finance and Trade, 40 (4), 63–83.
  • Schiuma, G. and Lerro, A. 2008. “Intellectual capital and company's performance improvement”, Measuring Business Excellence, 12 (2), 3–9.
  • Shiu, H. 2006. “The application of the value added intellectual coefficient to measure corporate performance: Evidence from technological firms”, International Journal of Management, 23, 356–365.
  • Siah, P. C. 2014. “The Relationship study of financial performance and intellectual capital of firms in the capital market of Malaysia”, Journal UMP Social Sciences and Technology Management, 2 (1), 8–21.
  • Spender, J. C. and Grant, R. M. 1996. “Knowledge and the firm: overview”, Strategic Management Journal, 17 (2), 5–9.
  • Statistical, Economic and Social Research and Training Centre for Islamic Countries (SESRIC) (December 2016). D-8 Economic Outlook. Accessed April 10, 2019. http://developing8.org/image/Booklet/D8-EconomicOutlook.pdf
  • Strischek, D. 2003. “The impact of working capital investment on the value of a company”, The RMA Journal, 85, (7), 48–55.
  • Subramaniam, M. and Youndt, M.A. 2005. “The influence of intellectual capital on the types of innovative capabilities”, Academy of Management Journal, 48 (3), 450–463.
  • Sveiby, K. 2000. Intellectual capital and knowledge management. www.sveiby. com.au/BookContents.html. Accessed December 20, 2018.
  • Sveiby, K. 2001. Methods for measuring intangible assets. www.sveiby.com.au/ BookContents.html. Accessed December 20, 2018.
  • Tan, H. P., Plowman, D. and Hancock, P. 2007. “Intellectual capital and financial returns of companies”, Journal of Intellectual Capital, 8 (1), 76–95.
  • Teece, D. 2002. Managing Intellectual Capital: Organizational, Strategic, and Policy Dimensions, Oxford: Oxford University Press.
  • Wasiuzzaman, S. 2013. “Working capital and firm value in an emerging market”, International Journal of Managerial Finance, 11 (1), 60–79.

İSLAM ÜLKELERİNDE ENTELEKTÜEL SERMAYENİN FİNANSAL PERFORMANS VE FİRMA DEĞERİNE ETKİSİ

Year 2021, , 532 - 555, 21.09.2021
https://doi.org/10.31460/mbdd.830178

Abstract

Bu çalışma, İslam ülkelerindeki şirketler için entelektüel sermaye verimliliğinin firma değeri ve finansal performans göstergeleri üzerindeki etkisini analiz etmektedir. Örneklem, 11 İslam ülkesinde yer alan 1,681 firmadan oluşmakta ve 2010-2017 yılları arasındaki sekiz yılı kapsamaktadır. Bu çalışma kapsamında katma değerli entelektüel sermaye metodolojisi uygulanmış ve sıradan en küçük kareler regresyonları panel veriler ile analiz edilmiştir. Bulgular, entelektüel sermayenin firma karlılığını ve likiditesini olumlu yönde etkilediğini, kaldıraç oranını ise olumsuz etkilediğini ortaya koymaktadır. Ayrıca, hem entelektüel sermaye hem de entelektüel sermayenin bileşenleri firma değerini olumlu yönde etkilemektedir. Son olarak, yapılan çalışma, şeriata uyumun, firma değeri, karlılık ve likidite üzerinde olumlu, kaldıraç üzerinde ise olumsuz bir etkiye sahip olduğunu ortaya koymaktadır. Bu çalışma, aynı anda 11 İslam ülkesini kapsayan çok geniş bir örneklem için entelektüel sermaye verimliliğinin firma değeri ve finansal performans göstergeleri üzerindeki etkisini analiz eden ve şeriata uyumun İslam ülkelerindeki firmaların değer ve mali performans özellikleri üzerindeki etkisini araştıran ilk çalışmadır.

References

  • Akgüç, S. and Rahahleh, N. A. 2018. “Effect of Shariah compliance on operating performance: Evidence from GCC countries”, Emerging Markets Finance and Trade, 54 (12), 2874-2896.
  • Alcaniz, L., Gomez-Bezares, F. and Roslender, R. 2011. “Theoretical perspectives on intellectual capital: a backward look and a proposal for going forward”, Accounting Forum, 35, 04–117.
  • Bolek, M. and Lyroudi, K. 2015. “Is there any relation between intellectual capital and the capital structure of a company? The Case of Polish Listed Companies”, Financial Internet Quarterly, 11, 23–33.
  • Bontis, N. 1999. “Managing organizational knowledge by diagnosing intellectual capital: Framing and advancing the state of the field”, International Journal of Technology Management, 18 (5), 433–462. Bontis, N., Keow, W.C.C. and Richardson, S. 2000. “Intellectual capital and business performance in Malaysian industries”, Journal of intellectual capital, 1 (1), 85–100.
  • Bozbura, F. T. 2004. “Measurement and application of intellectual capital in Turkey”, The Learning Organization, 11 (4/5), 357–367.
  • Busse, M. and Hefeker, C. 2007. “Political risk, institutions and foreign direct investment”, European Journal of Political Economy, 23(2), 397–415.
  • Campisi, D. and Costa, R. 2008. “A DEA-based method to enhance intellectual capital management”, Knowledge and Process Management, 15 (3), 170–183.
  • Chen, M. C., Cheng, S.J. and Hwang, Y. 2005. “An empirical investigation of the relationship between intellectual capital and firms’ market value and financial performance”, Journal of Intellectual Capital, 6 (2), 160–175.
  • Chung, K.H. and Pruitt, S.W. 1994. “A simple approximation of Tobin’s q”, Financial Management, 23, 70–74.
  • Copeland, T. E., Weston, J. F. and Shastri, K. 2009. Financial Theory and Corporate Policy. Pearson-Addison Wesley, New York.
  • Crnigoj, M. and Mramor, D. 2009. “Determinants of capital structure in emerging European economies: Evidence from Slovenian firms”, Emerging Markets Finance and Trade, 45 (1), 72–89.
  • Curado, C., Henriques, L. and Bontis, N. 2011. “Intellectual capital disclosure payback”, Management Decision, 49 (7), 1080–1098.
  • Drucker, P. F. 1988. “The coming of the new organization”, Harvard Business Review, 45-53.
  • Fijałkowska, J. 2014. Value added intellectual coefficient (VAIC™) as a tool of performance measurement. (University of Social Sciences Publishing House)
  • Firer, S. and Williams, S. M. 2003. “Intellectual capital and traditional measures of corporate performance”, Journal of Intellectual Capital, 4 (3), 348–360.
  • Guthrie, J. 2001. “The management, measurement and the reporting of intellectual capital”, Journal of Intellectual Capital, 2 (1), 27–41.
  • Guthrie, J., Ricceri, F. and Dumay, J. 2012. “Reflections and projections: A decade of intellectual capital accounting research”, British Accounting Review, 44 (2), 70-85.
  • Hassan, M. K., Kayed R. N. and Oseni U. A. 2013. Introduction to Islamic banking and finance: principles and practice. Edinburgh Gate, Harlow, England, Pearson Education Limited.
  • Huang, C. and Hsueh, S. 2007. “A study on the relationship between intellectual capital and business performance in the engineering consulting industry: A Path Analysis”, Journal of Civil Engineering and Management, 8, 265–271.
  • Itami, H. and Roehl, T. 1991. Mobilizing Invisible Assets. Harvard University Press.
  • Jensen, M. 1986. “Agency costs of free cash flow, corporate finance, and takeovers”, The American Economic Review, 76 (2), 323–329.
  • Maditinos, D., Chatzoudes, D., Tsairidis, C. and Theriou, G. 2011. “The impact of intellectual capital on firm’s market value and financial performance”, Journal of Intellectual Capital, 12, 132–151.
  • Mehralian, G., Rajabzadeh, A., Sadeh, R.M. and Rasekh, R.H. 2012. “Intellectual capital and corporate performance in Iranian pharmaceutical industry”, Journal of Intellectual Capital, 13 (1), 138–158.
  • Nahapiet, J. and Ghoshal, S. 1998. “Social capital, intellectual capital, and the organizational advantage”, Academy of Management Review, 23 (2), 242–266.
  • Nimtrakoon, S. 2015. “The relationship between intellectual capital, firms’ market value and financial performance: Empirical evidence from the ASEAN”, Journal of Intellectual Capital, 16 (3), 587–618.
  • Oppong, G. K. and Pattanayak, J. K. 2019. “Does investing in intellectual capital improve productivity? Panel evidence from commercial banks in India”, Borsa Istanbul Review, 19 (3), 219-227.
  • Panaretou, A. 2013. “Corporate risk management and firm value: evidence from the UK market”, The European Journal of Finance, 20 (12), 1161–1186.
  • Petty, R. and Guthrie, J. 2000. “Intellectual capital literature review: measurement, reporting and management”, Journal of Intellectual Capital, 1 (2), 155–176.
  • Pulic, A. 1998. Measuring the performance of intellectual potential in knowledge economy, 2nd McMaster Word Congress on Measuring and Managing Intellectual Capital by the Austrian Team for Intellectual Potential.
  • Pulic, A. 2000. “VAIC™–an accounting tool for IC management”, International Journal of Technology Management, 20 (5–8), 702–714.
  • Riahi-Belkaoui, A. 2003. “Intellectual capital and firm performance of US multinational firms: A study of the resource‐based and stakeholder views”, Journal of Intellectual Capital, 4 (2), 215–226.
  • Rizov, M. 2004. “Credit constraints and profitability: Evidence from a transition economy”, Emerging Markets Finance and Trade, 40 (4), 63–83.
  • Schiuma, G. and Lerro, A. 2008. “Intellectual capital and company's performance improvement”, Measuring Business Excellence, 12 (2), 3–9.
  • Shiu, H. 2006. “The application of the value added intellectual coefficient to measure corporate performance: Evidence from technological firms”, International Journal of Management, 23, 356–365.
  • Siah, P. C. 2014. “The Relationship study of financial performance and intellectual capital of firms in the capital market of Malaysia”, Journal UMP Social Sciences and Technology Management, 2 (1), 8–21.
  • Spender, J. C. and Grant, R. M. 1996. “Knowledge and the firm: overview”, Strategic Management Journal, 17 (2), 5–9.
  • Statistical, Economic and Social Research and Training Centre for Islamic Countries (SESRIC) (December 2016). D-8 Economic Outlook. Accessed April 10, 2019. http://developing8.org/image/Booklet/D8-EconomicOutlook.pdf
  • Strischek, D. 2003. “The impact of working capital investment on the value of a company”, The RMA Journal, 85, (7), 48–55.
  • Subramaniam, M. and Youndt, M.A. 2005. “The influence of intellectual capital on the types of innovative capabilities”, Academy of Management Journal, 48 (3), 450–463.
  • Sveiby, K. 2000. Intellectual capital and knowledge management. www.sveiby. com.au/BookContents.html. Accessed December 20, 2018.
  • Sveiby, K. 2001. Methods for measuring intangible assets. www.sveiby.com.au/ BookContents.html. Accessed December 20, 2018.
  • Tan, H. P., Plowman, D. and Hancock, P. 2007. “Intellectual capital and financial returns of companies”, Journal of Intellectual Capital, 8 (1), 76–95.
  • Teece, D. 2002. Managing Intellectual Capital: Organizational, Strategic, and Policy Dimensions, Oxford: Oxford University Press.
  • Wasiuzzaman, S. 2013. “Working capital and firm value in an emerging market”, International Journal of Managerial Finance, 11 (1), 60–79.
There are 44 citations in total.

Details

Primary Language English
Subjects Business Administration
Journal Section MAIN SECTION
Authors

İrem Nuhoğlu 0000-0003-2649-2907

Deniz Parlak 0000-0001-7203-0055

Seda Erdoğan 0000-0001-6701-4448

Publication Date September 21, 2021
Submission Date November 23, 2020
Published in Issue Year 2021

Cite

APA Nuhoğlu, İ., Parlak, D., & Erdoğan, S. (2021). THE IMPACT OF INTELLECTUAL CAPITAL ON FINANCIAL PERFORMANCE AND FIRM VALUE IN ISLAMIC COUNTRIES. Muhasebe Bilim Dünyası Dergisi, 23(3), 532-555. https://doi.org/10.31460/mbdd.830178