The efficiency of GCC banks: the role of intellectual capital

2020 ◽  
Vol 32 (3) ◽  
pp. 383-404 ◽  
Author(s):  
Amina Buallay ◽  
Allam Mohammed Hamdan ◽  
Sameh Reyad ◽  
Sherine Badawi ◽  
Araby Madbouly
Keyword(s):  
Intellectual Capital ◽  
Market Performance ◽  
Value Added ◽  
Return On Assets ◽  
Content Type ◽  
Return On Equity ◽  
Capital Efficiency ◽  
Independent Variable ◽  
The Impact

Purpose This study aims to examine the impact of intellectual capital (IC) efficiency on bank’s operational, financial and market performance. Design/methodology/approach The study examined 59 banks for 5 years to ends up with 295 observations. The independent variable is the modified value added IC component; the dependent variables are performance indicators (return on assets [ROA], return on equity [ROE] and Tobin’s Q [TQ]). Findings The findings deduced from the empirical results demonstrate that there is a positive relationship between intellectual capital efficiency and financial performance (ROE) and market performance (TQ). Originality/value The results of this study may give a wake-up call for banks to examine the reasons of imperfect relationship between the IC and asset efficiency (ROA).

Impact of intellectual capital on corporate performance: evidence from the Arab region

2017 ◽  
Vol 18 (4) ◽  
pp. 884-903 ◽  
Author(s):  
Vladimir Dzenopoljac ◽  
Chadi Yaacoub ◽  
Nasser Elkanj ◽  
Nick Bontis
Keyword(s):  
Intellectual Capital ◽  
Corporate Performance ◽  
Market Performance ◽  
Value Added ◽  
Physical Capital ◽  
Publicly Traded ◽  
Content Type ◽  
Capital Efficiency ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is twofold: first, to fill a gap in the intellectual capital (IC) literature by providing insights into the relationship between IC and corporate performance among Arab companies and second, to challenge the validity of the Value Added Intellectual Coefficient (VAIC) as a measure of IC’s contribution to performance. Design/methodology/approach The research sample included 100 publicly traded Arab companies selected by Forbes Middle East and ranked as top performers in terms of sales, profits, assets, and market value. The methodology included assessing the impact of IC components on company earnings, profitability, efficiency, and market performance for the period between 2011 and 2015. Research hypotheses were tested through the presentation of descriptive statistics, normality tests, correlation matrix, and multiple regression models. Findings The research yielded ambiguous results. Earnings and profitability were significantly affected by structural and physical capital; efficiency was determined primarily by physical capital; and market performance was mainly influenced by human capital. Research limitations/implications The main limitation of the research comes from disadvantages of VAIC as the measure of IC’s contributions to performance. Originality/value The paper fills a void in the study of IC and corporate performance among Arab companies.

Sustainability reporting and firm’s performance

2019 ◽  
Vol 69 (3) ◽  
pp. 431-445
Author(s):  
Amina Buallay
Keyword(s):  
Banking Sector ◽  
Manufacturing Sector ◽  
Market Performance ◽  
Sustainability Reporting ◽  
Return On Assets ◽  
Content Type ◽  
Return On Equity ◽  
Pooled Data ◽  
Independent Variable ◽  
The Impact

Purpose The purpose of this paper is to provide a comparison between manufacturing and banking sectors with regards to the level of sustainability reporting (environmental, social and governance (ESG)) and its impact on operational, financial and market performance. Design/methodology/approach The research is quantitative, based on pooled data analysis of 932 manufactures and 530 banks listed on 80 countries for ten years from 2008 to 2017 ending up with 11,705 observations. A multivariate model is used to investigate the impact of sustainability reporting (ESG) on a firm’s performance. The theoretical model is built on agency, legitimacy, resources and stakeholders’ theories. The practical model is built on independent variable (ESG) and the dependent variables (return on assets, return on equity and Tobin’s Q). Findings The findings deduced from the empirical results on one hand demonstrated that ESG positively affect the operational, financial and market performance in the manufacturing sector. However, on the other hand, the ESG negatively affect the operational, financial and market performance in the banking sector. Originality/value This research makes a contribution to the scarce literature and compares the level of sustainability reporting and its impact on performance in both the manufacturing and banking sector which are two of the major and important sectors in the global financial markets.

Intellectual capital and firm performance in emerging economies: the case of India

2016 ◽  
Vol 26 (3) ◽  
pp. 410-430 ◽  
Author(s):  
Santi Gopal Maji ◽  
Mitra Goswami
Keyword(s):  
Firm Performance ◽  
Intellectual Capital ◽  
Value Added ◽  
Relative Importance ◽  
Content Type ◽  
Knowledge Based ◽  
Traditional Sector ◽  
Steel Sector ◽  
Capital Efficiency ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of intellectual capital (IC) on Indian traditional sector and compare the relative importance of IC on corporate performance of Indian knowledge-based sector (engineering sector) and traditional sector (steel sector). Design/methodology/approach Secondary data on 100 listed Indian firms, comprising of 44 firms from the engineering sector and 56 from the steel sector, are collected from “Capitaline Plus” Corporate database for a period of 14 years from 1999-2000 to 2012-2013. IC and its components are computed using Pulic’s value-added intellectual coefficient model and firm performance is measured by return on asset. Fixed effect regression model is used to investigate the hypothetical relationship between IC and firm performance. Further, quantile regression is used to check the robustness of the results. Findings The results indicate that IC efficiency and physical capital efficiency are positively and significantly associated with the firm performance for both the sectors. Regarding the components of IC, the coefficient of human capital efficiency is positive and significant, but the present effort fails to disentangle any significant influence of structural capital efficiency on firm performance. However, the results indicate that the influence of IC efficiency on firm performance is significantly greater in case of knowledge-based sector than that of traditional sector. Practical implications The findings of the study are useful for the decision makers, as the results indicate that the IC plays crucial role in value creation not only for knowledge-based firms but also for the firms belonging to the traditional manufacturing sector. Originality/value In the Indian context, this is the first study to examine the relative importance of IC in a knowledge-based sector and a traditional sector using appropriate methodology.

How does intellectual capital efficiency affect firm performance? The moderating role of family management

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yolanda Ramírez ◽  
Julio Dieguez-Soto ◽  
Montserrat Manzaneque
Keyword(s):  
Firm Performance ◽  
Intellectual Capital ◽  
Family Management ◽  
Content Type ◽  
Intangible Resources ◽  
Structural Capital ◽  
Capital Efficiency ◽  
The Impact ◽  
Moderating Role

PurposeThe purpose of this paper is twofold: to know whether those firms that achieve greater efficiency from their intangible resources (intellectual capital) also obtain greater performance; and to analyze the moderating role of family management on that relationship in small to medium-sized enterprises (SMEs).Design/methodology/approachThis paper conducts an empirical study with different econometric models using a panel data sample of 6,132 paired firm-year observations from Spanish manufacturing SMEs in the period 2000–2013.FindingsThe findings suggest that intellectual capital efficiency is a key factor that allows the firm to achieve and maintain competitive advantages, obtaining greater performance. Additionally, this research also shows that the moderating role of family management can be a double-edged sword depending on the type of intangible resources.Practical implicationsThis paper may give managers an insight in how to better utilize and manage intangible resources available in their firms to improve competitive advantage and ultimately firm performance. Additionally, on the basis of the Socioemotional Wealth perspective (SEW), this article argues that family-managed firms that focus on SEW preservation can enhance the impact of structural capital efficiency on performance.Originality/valueThis paper extends the prior literature by studying the joint effects of intellectual capital efficiency, distinguishing between human capital and structural capital efficiency, and family management on performance in the context of SMEs.

Intellectual capital efficiency and bank’s performance

2019 ◽  
Vol 31 (4) ◽  
pp. 672-694 ◽  
Author(s):  
Amina Buallay ◽  
Richard Cummings ◽  
Allam Hamdan
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Positive Relationship ◽  
Market Performance ◽  
Value Added ◽  
High Tech ◽  
Islamic Banks ◽  
Content Type ◽  
Conventional Banks ◽  
The Impact

Purpose Intellectual capital (IC) plays a pivotal role in the high-tech and knowledge-based economic sectors. With the emergence of FinTech, which, with respect to the banking sector, is merging high-tech with the k-economy, there is an emerging need to highlight the importance and understand the dynamics of bank IC. With respect to Gulf Cooperation Council (GCC) economies, where FinTech has become de rigueur, banking is bifurcated into Islamic and banking sectors. Through comparative empirical analysis, the purpose of this paper is to examine IC efficiency in Islamic and conventional banks with a view to elucidating the impact of IC, in aggregate and decomposed into its components, on an operational, financial and market performance of Islamic banks juxtaposed with conventional banks. Design/methodology/approach Using data collected from 59 banks for five years (2012-2016) involving 295 observations, an independent variable derived from the modified value added IC (MVAIC) components are regressed against dependent bank performance indicator variables [Return on Assets (ROA), Return on Equity (ROE) and Tobin’s Q (TQ)]. Two types of control variables complete the regression analysis in this study: bank-specific and macroeconomic. Findings The findings elicited from the empirical results demonstrate that there is positive relationship between IC efficiency and financial performance (ROE) and market performance (TQ) in Islamic banks. In conventional banks, however, there is a positive relationship between IC and operational performance (ROE) and financial performance (ROE). Originality/value The model in this paper presents a valuable analytical framework for exploring IC efficiency as a driver of performance in dual-sector banking economies characterized by co-existence of Islamic and conventional financial institutions. In addition, this paper highlights bank management lacunae manifesting in terms of the weak nexus between: IC and asset efficiency (ROA) in Islamic banks and IC and market value (TQ) in conventional banks.

scholarly journals Determinants of financial performance of Islamic banks: an intellectual capital perspective

2017 ◽  
Vol 8 (2) ◽  
pp. 130-142 ◽  
Author(s):  
Tasawar Nawaz ◽  
Roszaini Haniffa
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Positive Relationship ◽  
Value Added ◽  
Annual Reports ◽  
Content Type ◽  
Significant Positive Relationship ◽  
Accounting Performance ◽  
Capital Efficiency ◽  
The Impact

Purpose The purpose of this paper is to empirically examine the effect of intangible resources, i.e. intellectual capital (IC) on financial performance of 64 Islamic financial institutions (IFIs) operating in 18 different countries for the period 2007-2011, while controlling for firm-specific variables, namely, bank size, level of risk, listing status, and firm complexity. Design/methodology/approach The required data to calculate different constituents of IC are derived from Bankscope database. Value Added Intellectual Coefficient (VAIC) methodology devised by Pulic is used to determine the impact of IC on financial performance of IFIs. Findings Results indicate a significant positive relationship between VAIC and accounting performance based on return on assets (ROA). The results further indicate a significant positive relationship between accounting performance and capital employed efficiency (CEE) and human capital efficiency (HCE), but no significant relationship with regards to structural capital efficiency. Overall, the results suggest that value creation capability of IFIs is highly influenced by HCE and CEE. Research limitations/implications The main limitation of the present study lies in its methodological tool, the VAIC methodology, which has been criticized by some researchers as not really measuring IC. Despite the inherent limitation of the VAIC methodology which relies on secondary data published in annual reports, it is still considered by some researchers as one of the best available tool to measure firms’ IC in the absence of access to detailed internal information on IC. Practical implications The findings may serve as a useful input for Islamic bankers in managing their investments in IC within their institutions. Originality/value The main contribution of this paper is to use a previously little-studied area, Islamic banking and finance, to identify the effect of intellectual capital on performance.

scholarly journals PENGARUH HUMAN CAPITAL, STRUCTURE CAPITAL, DAN PHYSICAL CAPITAL TERHADAP KINERJA PERUSAHAAN PERBANKAN DI INDONESIA

2019 ◽  
Vol 8 (1) ◽  
Author(s):  
Agustinus Jeneo
Keyword(s):  
Human Capital ◽  
Intellectual Capital ◽  
Negative Impact ◽  
Stock Exchange ◽  
Value Added ◽  
Physical Capital ◽  
Return On Equity ◽  
Result Show ◽  
Capital Efficiency ◽  
The Impact

The objective of this study are to analyze the impact of intellectual capital (HumanCapital, Structure Capital and Physical Capital) on company’s financial performance Return on Assets (ROA) dan Return On Equity (ROE). This research used banking company data that listed in Indonesia Stock Exchange (IDX) 2011-2012. The model that used to measure intellectual capital was Pulic model agregatly-using Value Added Intellectual Coefficient (VAIC™) or separately-using Human Capital Efficiency (HCE), Structure Capital Efficiency (SCE), and Physical Capital/ Capital Employed Efficiency (CEE). The result show: (1) Human Capital Efficiency (HCE) not significant  impact on ROA, (2) Human Capital Efficiency (HCE) not significant impact on ROE, (3) Structure Capital Efficiency (SCE) not significant impact on ROA, (4) Structure Capital Efficiency (SCE) negative impact on ROE (5) Physical Capital/Capital Employed Efficiency (CEE) has a positive significant impact on ROA, (6) Physical Capital/Capital Employed Efficiency (CEE) has a positive significant impact on ROE

scholarly journals PENGARUH INTELLECTUAL CAPITAL TERHADAP KINERJA KEUANGAN PERBANKAN SYARI’AH DI INDONESIA

2017 ◽  
Vol 20 (3) ◽  
pp. 346
Author(s):  
Santi Dwie Lestari ◽  
Hadi Paramu ◽  
Hari Sukarno
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Descriptive Analysis ◽  
Value Added ◽  
Islamic Banking ◽  
Return On Assets ◽  
Operating Income ◽  
Independent Variable ◽  
The Right ◽  
The Impact

The purpose of this study is to test the impact of intellectual capital on corporate financial performance, the impact of intellectual capital a year before on company’s future financial performance on Indonesian islamic banking for the period 2009-2013. The selection of Islamic banking because of progression of sharia principles-based bank in Indonesia is now the middle of rapid progress. Islamic banking in Indonesia requires the right strategy in communicating Islamic banking products and services to the community. The methods used in this research is explanatory research. Variables used in the study consisted of the dependent variable and independent variable. The dependent variable in this study is financial performance as measured by Return on Assets (ROA), operational costs against operating income (BOPO), and Financing to Deposit Ratio (FDR). Independent variables from this research is the intellectual capital that is measured by the Value Added method with Intellectual Capital (VAICTM). The sample was selected using a purposive sampling method and sample as many as 18 members of syari’ah bank. Research data processed with descriptive analysis and analysis of two way ANOVA using SPSS. The results of this research indicate that intellectual capital affect the financial performance of the company, intellectual capital in the previous period to the next period of financial performance.

scholarly journals Impact of Intellectual Capital on Corporate Performance

2020 ◽  
Vol 5 (6) ◽  
Author(s):  
Sedeaq Nassar
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Data Model ◽  
Value Added ◽  
Return On Assets ◽  
Return On Equity ◽  
Firm Financial Performance ◽  
Structural Capital ◽  
Capital Efficiency ◽  
The Relationship

The main objective of current study is to investigate the relationship between intellectual capital and corporate financial performance of 34 from 48 companies listed on Palestine Exchange (PEX) over the period of 2012-2018. Pulic’s method “Value Added Intellectual Coefficient (VAIC)” is utilized to measure the Intellectual Capital (IC), and three of traditional accounting tools involving; return on equity (ROE), return on assets (ROA), and earning per share (EPS) ratios is used as a proxy of firm financial performance. The findings of Panel data model show that human capital efficiency (HCE) is consider as the most effective element of intellectual capital in the issue of value creation than structural capital and capital employed. Moreover, VAIC shows a good relationship with financial performance represented by return on assets (ROA). In conclusion, Palestinian listed companies are still weakly used its intellectual capital' potentials in create value.

Intellectual capital efficiency and organisational performance

2019 ◽  
Vol 20 (6) ◽  
pp. 784-806 ◽  
Author(s):  
Leena Afroz Mostofa Chowdhury ◽  
Tarek Rana ◽  
Mohammad Istiaq Azim
Keyword(s):  
Human Capital ◽  
Intellectual Capital ◽  
Emerging Economy ◽  
Return On Assets ◽  
Content Type ◽  
Return On Equity ◽  
Structural Capital ◽  
Asset Turnover ◽  
Capital Efficiency ◽  
The Relationship

Purpose The purpose of this paper is to, the first of its kind, investigate the relationship between the intellectual capital efficiency and organisational performance of the pharmaceutical sector in Bangladesh, an emerging economy that enjoys Trade-Related Aspects of Intellectual Property Rights (TRIPS) relaxation. Design/methodology/approach The study used hand-picked data from annual reports for five years. The relationship between efficient use of intellectual capital and corporate performance was examined through the practical use of human capital, structural capital and capital employed. Multiple regressions were used to assess their impact on financial performance – specifically, return on assets, return on equity, asset turnover and market-to-book value. Findings Value-added intellectual coefficient components (i.e. human capital, structural capital and capital employed) significantly explained asset turnover and return on assets but failed to predict the return on equity outcome. Additionally, asset turnover was negatively influenced by structural capital and positively influenced by capital employed. The return on assets was mostly affected by variation in human capital. Intellectual capital did not predict market-to-book value or investment decisions. Practical implications This paper provides useful resources for evaluating the financial performance and value creation of companies in emerging economies that enjoy TRIPS exemptions; this research could also be extended using cross-industry comparisons. The findings have theoretical and practical implications, particularly for the pharmaceutical industry in emerging economy contexts, and for managers globally. Originality/value This study is among only a few that have reported on the relationship between intellectual capital efficiency and value creation in emerging economy contexts.

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