Title: Evaluating intellectual capital and its impact on financial performance: empirical evidence from Indian electricity, mining and asset financing service sectors

Authors: Karam Pal Narwal; Nisha Yadav

Addresses: Haryana School of Business, Guru Jambheshwar University of Science and Technology (GJUST), Hisar, Haryana, India ' Haryana School of Business, Guru Jambheshwar University of Science and Technology (GJUST), Hisar, Haryana, India

Abstract: This paper empirically examines the impact of the intellectual capital (IC) efficiency on the financial performance of the Indian electricity, mining and asset financing service sectors. The model value-added intellectual coefficient (VAIC™) by Pulic used as a methodology to evaluate the value-added efficiency of the selected 60 companies from the Bombay Stock Exchange ranging from 2006 to 2015 on the basis of market capitalisation. The major findings of correlation analysis suggested that IC has a positive relationship with profitability and an inverse relationship with productivity. Consequently, IC has partially positive impact on financial performance and may become a path for improvement in future. The main evidence revealed that human capital has the strongest positive effect on firm value. The current empirical evidence extends concrete step towards the profound understanding the role of IC in improving performance ability of the firms and it helps the organisations to create and maintain an emulous advantage in nascent economies.

Keywords: empirical study; financial performance; India; intellectual capital; productivity; profitability; value added; value added intellectual coefficient.

DOI: 10.1504/IJLIC.2017.087376

International Journal of Learning and Intellectual Capital, 2017 Vol.14 No.4, pp.319 - 337

Received: 13 Feb 2017
Accepted: 28 Apr 2017
Published online: 13 Oct 2017 *

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