The Impact of Intellectual Capital on Financial Performance: Empirical Evidence of Listed Firms on Hochiminh Stock Exchange

- The Impact of Intellectual Capital on Financial Performance: Empirical Evidence of Listed Firms on Hochiminh Stock Exchange.
- This study investigate the relationship between intellectual capital and financial performance of 179 listed firm on Hochiminh Stock Exchange.
- The study uses value added intellectual capital method (VAIC) to measure the intellectual capital and Return on asset (ROA) to measure financial performance.
- Keywords: Intellectual capital, Financial performance.
- There is an increasing trend of interest on intellectual capital because of this key driver of value creation among corporation..
- Intellectual capital is often referred to as intangibles particularly in research literature.
- It is the reason to discuss and exam the relationship between intellectual capital.
- and firm performance because firms are aware of the importance of these intangible assets and the present of intellectual capital in manufacture processes..
- Bontis Bio's research (since 1997) on knowledge capital is considered the first in the field of knowledge and knowledge management.
- The study identifies three components of knowledge capital: Human Capital (HC), Structural Capital (SC), Customer Capital (CC).
- Bontis, Chua, Richardson (2000) in research: "Intellectual Capital and Business Performance in Malaysian Industry,".
- Research showed that regardless of the type of business, human capital is important, the customer capital has a significant impact on the capital structure, and confirmed the development of structural capital is positively connected to the business performance.
- In addition, this study also shows that human capital is more powerful in the non-service industry than in the service industry..
- Studies of Lodhi and Rohra, 2009 invested the link between intellectual capital measured by VAIC model and financial performance.
- They suggested that the intellectual capital has significantly positive impact on capital gain of investors.
- Considering the relationship between knowledge capital and market value and the financial performance of enterprises, the article "An empirical investigation of the relationship between intellectual capital and firms' market value and financial performance".
- The development of this study is to explore the relationship between knowledge capital and financial performance of enterprises in the present and in the future.
- The results indicated that knowledge capital has a positive impact on the market value and the current financial situation.
- In the future, knowledge can be considered as an indicator.
- The study demonstrated the different effects of the three components of VAIC on the dependent variables of market value and financial performance.
- The authors point out the inadequacy in the of capital structure (SC), and provide evidence that the cost of investment and development (R &.
- The results of Hassani and Nasiri (2014) have concluded that intellectual capital has no relationship with the value of the company on the stock market.
- The topic examines the relevance of information about intellectual capital to investors and the role of the components of intellectual capital in explaining the value of the company, using a sample of 159 companies listed on the Stock Exchange Tehran (Iran) for the period 2006-2012.
- The authors used the Ohlson model to standardize share prices by function of book value, income and other types of information that may be related to the value of the company.
- Other components of intellectual capital include human capital and structure capital do not effect the firm performance..
- In the context of Vietnam, the require of intellectual management is increasing, there are some studies about intellectual capital.
- For example: In the essay "Contributing capital to establish enterprises by intellectual property rights in Vietnam", Doan Thu Hong (2012) aims to generalize the situation of capital contribution to establish enterprises by intellectual property rights in Vietnam.
- The paper does not focus on how to measure the intellectual capital, but focuses on providing the information required by law about intellectual capital..
- In other words, many authors in the world and in Vietnam have studied the factors affecting the firm performance such as Hansen and Wernerfelt (1989), Juliana and Luiz (2012) or Quoc Nghi and Van Nam ( 2011), but these factors have not been found completely and knowledge is one of the underlying factors.
- The study of the impact of intellectual capital on financial performance is still limited.
- Especially, Intellectual capital is a new topic in Vietnam but has received the attention of a large number of researchers such as Bui Quang Binh (2009), Tran Tho Dat (2011.
- However, there are very few articles study and assess the impact of intellectual capital to the production and business of enterprises in Vietnam.
- Recognizing the urgency of the research topic goes along with exploring these gaps, this paper will test the relationship between intellectual capital and financial performance.
- Ebrahim, Abdullah, Faudziah (2014) classify financial performance measures into two categories: accounting-based measurement and market-based measurement..
- By reviewing most of the 2000-2012 research on measurement of financial performance, Ebrahim, Abdullah, Faudziah (2014) have shown the number of studies using ROA and ROE (88 and 52).
- although there is some criticisms of the use of accounting measures such as ROE that are easily distorted by corporate investment strategies or ROA should only be used for comparison in the same business sector..
- These indicators show financial performance through economic factors, measured directly through the profit of the business so that the analysis work easier, making it easier for investors to compare, choose and make the right decision.
- Between ROA and ROE, researchers often prioritize the use of ROA because, as mentioned above, ROE is easily distorted, thus reflecting financial missteps that affect the decision of the investor.
- The action of buying treasury shares will reduce the number of shares currently circulating in the market, and the book value also decreased.
- Therefore, in this study, authors use ROA as the indicator of financial performance.
- Intellectual capital: is a broad concept that many researchers consider.
- to be similar with the words: intangible assets, knowledge assets, knowledge, information assets, human capital, or hidden value of the business..
- Intellectual capital (IC).
- For example, when IC is used with physical and financial assets, the value of the assets will increase.
- HCE covers the skills, experience, productivity, knowledge and suitability of employees in the workplace.
- According to the VAIC model, human capital (HC) is defined as wages and salaries (Pulic, 1998).
- In the control model, more skilled laborers receiving higher salaries would increase the value of the company more than the lower-paid workers..
- There is a big gap between the value of the business on the balance sheet and the view of the investor on the value.
- In most enterprises today, the evaluation of the market is mainly expressed in the brand name but it is not clear what the role of intellectual capital in it.
- When involved in the business, people knowledge become the intellectual property of that business.
- In South Africa, Firer and Williams (2003) investigated the relationship between intellectual capital and performance of 75 companies on the Johannesburg Stock Exchange and used measures of profit, productivity and market value.
- The authors conclude that there is no significant relationship between intellectual capital and company performance.
- According to the results of this study, it seems that compared to European countries, countries in South Africa depend less on intellectual capital.
- Tseng and Goo (2005) point out that the factors of human capital, structure capital have a significant positive impact on the profitability of the business.
- As a result, the overall positive impact of intellectual capital on business activities of enterprises.
- VAIC method, concluded that there is a positive relationship between intellectual capital and market value.
- The author mentions the issue that investors should consider information on intellectual property in the decision-making process.
- In this study, the positive relationship between the factors was consistent with the results of the previous study..
- In the Malaysian study on the relationship between knowledge capital and corporate efficiency, Ting and Lean (2009) used the VAIC method and analyzed it in relation to the ROA.
- The subject found a very positive result, up to 76%, on the relationship between the three components of intellectual capital and profitability.
- The data used in this study are collected from audited financial statements, annual reports and stock exchange statistics for the period 2014-2017 of 179 companies listed on the Stock Exchange.
- Ho Chi Minh City is posted on the official website of the company, the official website of Ho Chi Minh City Stock Exchange and the website www.finance.vietstock.vn..
- Hypothesis 1: The effectiveness of human capital has a positive effect on financial performance.
- Hypothesis 2: The effectiveness of structure capital has a positive effect on financial performance.
- Hypothesis 3: The capital employed efficiency has a positive effect on financial performance.
- Value added inellectual capital (VAIC) was developed by Public in 1998, whereby VAIC is considered as an effective measure by which a company uses material, financial, and intellectual capital to increase.
- Human Capital Effect (HCE): Human capital includes the skills, experience, productivity, knowledge and suitability of employees in the workplace.
- Therefore, the efficiency of using capital of enterprises must be put on the top..
- Studies by Ghosh, Nag and Sirmans (2000), Berger and Bonaccorsi di Patti (2006) show that the relationship between leverage and financial performance is positive.
- (2000), Simerly and Li (2000) Zeitun and Tian (2007), Nguyen Le Thanh Tuyen (2013), show that negative business leverages on financial performance.
- In the Baumol study (1959), Malik (2011), Quoc Nghi and Van Nam (2011) have shown that the size of the business is positively correlated with enterprise profitability.
- The ROA indicates the relationship between the ratio of net profit to total assets and the average value of 6.45%.
- The mean of value added intellectual capital (VAIC) is 5.89 and the significant difference between observations (standard deviation is 7.3) is due to the fact that the use of knowledge capital in different occupations is different.
- Firstly, the relationship between human capital efficiency (HCE) and financial performance is the positive.
- This confirms the hypothesis H1: The effectiveness of human capital has a positive effect on the financial performance of enterprises listed on the Ho Chi Minh City Stock Exchange Period .
- They stated there is no relationship between HCE and ROA.
- Knowing how to use and improve the quality of human resources is one of the keys to the success of a business, especially those in the non- manufacturing sector.
- Secondly, the efficiency of capital structure has the same effect on the return on assets and this result is statistically significant with P-value = 0.005.
- This confirms the H2 hypothesis: The effect of structured capital has a positive effect on the financial performance of listed firms on the Ho Chi Minh City Stock Exchange The period similar to Hong Kong's experimental evidence of Chan (2009b).
- In contrast to this conclusion, Shiu (2006b) and Ting and Lean (2009) point to the negative relationship of the efficiency of using structured capital to the return on assets.
- Structured capital represents the core values of the internal machinery of an enterprise.
- An economic organization that builds its foundations for a firm corporate culture will gain many advantages in the business process and will stand up to difficulties in different contexts of the economy..
- capital efficiency increased by 1 unit, the financial performance increased by 0.236 units..
- However, with a significance level of 5%, this result is not statistically significant, which means that the H3c hypothesis: The capital employed effieciency has a positive effect on the financial performance of listed firms on the Hochiminh Stock Exchange is not supported..
- Considering the significance level of 5%, the effective use of structured capital (SCE) has the strongest impact on the financial performance of enterprises.
- It can be seen that when referring to this intangible capital in Vietnam, enterprises use the resources of the organization as corporate culture or management system more efficiently than using the resources of each individual in the company.
- This implies that enterprises listed on the Hochiminh Stock Exchange do not have appropriate human resource management methods to enhance the qualities such as creativity, dynamism or individual satisfaction..
- Abundance of knowledge capital should be reflected in the annual report or other media of the business to investors as well as other stakeholders to create a positive effect on the market value of the business.
- Secondly, for those businesses that have not accumulated much knowledge capital, they need to improve and accumulate capital to increase the value of enterprises in the market as well as catch up the development trend of the economy.
- On the other hand, development needs to be consistent with the structure or characteristics of organizational structure, strategy, scale, process.
- requires the building and accumulation of all components in the enterprise, more specifically, human resources..
- Chan, KH (2009b), ‘Impact of intellectual capital on organisational performance.
- An empirical study of companies in the Hang Seng Index (Part 2.
- Bontis, Chua, Richardson (2000), ‘Intellectual Capital and Business Performance in Malaysian Industry’, Journal of Intellectual Capital..
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- Ebrahim Mohammed Al-Matari, Abdullah Kaid Al-Swidi, Faudziah Hanim Bt Fadzil (2014), ‘The Measurements of Firm Performance’s Dimensions’, Asian Journal of Finance.
- Ibrahim KARAASLAN (2014), ‘The Effect of Research and Development Investment on Fims’ Financial Performance: Evidence From Manufactiring Firms in Turkey’, The Journal of Knowledge Economy &.
- Williams, SM (2003), ‘Intellectual Capital and Traditional Measures of Corporate Performance’, Journal of Intellectual Capital .
- James, YJ (2005), ‘Intellectual capital and corporate value in an emerging economy: empirical study of Taiwanese manufacturers’, R&D Management .
- Lean, HH (2009), ‘Intellectual capital performance of financial institutions in Malaysia’, Journal of Intellectual Capital

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