Title: The value relevance of intellectual capital on the firm's market value: an empirical survey on the Italian listed firms

Authors: Olga Ferraro, Stefania Veltri

Addresses: Department of Business Administration, University of Calabria, 87036 Arcavacata di Rende (CS), Calabria, Italy. ' Department of Business Administration, University of Calabria, 87036 Arcavacata di Rende (CS), Calabria, Italy

Abstract: The purpose of the paper is to investigate the value relevance of intellectual capital (IC) of Italian listed firms. The paper applies the Ohlson model (1995) to 524 firm-year observations of Italian listed companies for the three-year period 2006-2008 using a panel econometric model. The findings show that the fundamental variables of the Ohlson model (book value and earning) are positively related to the market value. On the contrary, the IC variables, which reflect human capital, innovation capital, process capital and relation capital, do not have a meaningful relation with the market value, except for the last one. Concluding, Italian investors do not seem to be able to detect and incorporate the information on IC as represented in the IC proxies chosen for the research into their business valuation process.

Keywords: intellectual capital; value relevance; Ohlson model; market value; empirical survey; Italian listed firms; Italy; human capital; innovation capital; process capital; relationship capital; business valuation.

DOI: 10.1504/IJKBD.2011.040626

International Journal of Knowledge-Based Development, 2011 Vol.2 No.1, pp.66 - 84

Published online: 07 Jun 2011 *

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