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Conference Paper: An empirical study of the impact of intellectual capital performance on business performance

TitleAn empirical study of the impact of intellectual capital performance on business performance
Authors
KeywordsIntellectual capital
VAIC™
Financial performance
Value creation
Hang Seng Index
Hong Kong
Issue Date2010
PublisherAcademic Publishing Limited.
Citation
The 7th International Conference on Intellectual Capital, Knowledge Management & Organisational Learning (ICICKM 2010), Hong Kong, China, 11-12 November 2010. In Proceedings of the 7th ICICKM, 2010, p. 70-71 How to Cite?
AbstractThis study attempts to shed light on intellectual capital (IC) performance of Hong Kong companies and its possible associations with business performance. Audited accounting data were collected from the constituent companies of Hang Seng Index in Hong Kong Stock Exchange between 2005 – 2008. In order to compute a set of IC efficiency indexes based on VAIC™. Value Added Intellectual Coefficient (VAIC™) is a quantitative IC measurement method which was pioneered by Pulic (2000) of the Austrian IC Research Centre. Four accounting ratios: market-to-book value (MB), return on assets (ROA), asset turnover (ATO) and return on equity (ROE) were used as proxies for measuring business performance. VAIC™ and its associated indexes, and the accounting ratios of sample companies are submitted to regression analysis for the detection of their associations. No conclusive evidence was found to support the associations between VAIC™ and the four financial indicators. However, components of VAIC™ were found to be able to predict a substantial variance in business performance. For example, Capital Employed Efficiency (CEE) has been found to be the key factor in predicting business financial performance. In addition, Structural Capital Efficiency (SCE) has an effect on market valuation as measured by MB as well as profitability as measured by ROE. Interestingly, negative correlations were observed between Human Capital Efficiency (HCE) and the financial indicators which, perhaps, were due to the existence of a gap between the traditional accounting perspective and value creation perspective which is central to the VAIC™ methodology in measuring IC. It is believed that the empirical results of this research have provided some new insights to the stakeholders of Hong Kong companies in utilizing IC, particularly the noted impact of structural capital. While physical and financial assets, still, appears to be taking on an important role as the key resources in delivering business success, IC, or to be exact, structural capital may be silently making headway into the fabric of Hong Kong’s economy as illustrated by its impact in delivering return on equity (ROE).
Persistent Identifierhttp://hdl.handle.net/10722/136170

 

DC FieldValueLanguage
dc.contributor.authorYu, KYen_US
dc.contributor.authorNg, HTen_US
dc.contributor.authorWong, WKen_US
dc.contributor.authorChu, SKWen_US
dc.contributor.authorChan, KHen_US
dc.date.accessioned2011-07-27T02:04:01Z-
dc.date.available2011-07-27T02:04:01Z-
dc.date.issued2010en_US
dc.identifier.citationThe 7th International Conference on Intellectual Capital, Knowledge Management & Organisational Learning (ICICKM 2010), Hong Kong, China, 11-12 November 2010. In Proceedings of the 7th ICICKM, 2010, p. 70-71en_US
dc.identifier.urihttp://hdl.handle.net/10722/136170-
dc.description.abstractThis study attempts to shed light on intellectual capital (IC) performance of Hong Kong companies and its possible associations with business performance. Audited accounting data were collected from the constituent companies of Hang Seng Index in Hong Kong Stock Exchange between 2005 – 2008. In order to compute a set of IC efficiency indexes based on VAIC™. Value Added Intellectual Coefficient (VAIC™) is a quantitative IC measurement method which was pioneered by Pulic (2000) of the Austrian IC Research Centre. Four accounting ratios: market-to-book value (MB), return on assets (ROA), asset turnover (ATO) and return on equity (ROE) were used as proxies for measuring business performance. VAIC™ and its associated indexes, and the accounting ratios of sample companies are submitted to regression analysis for the detection of their associations. No conclusive evidence was found to support the associations between VAIC™ and the four financial indicators. However, components of VAIC™ were found to be able to predict a substantial variance in business performance. For example, Capital Employed Efficiency (CEE) has been found to be the key factor in predicting business financial performance. In addition, Structural Capital Efficiency (SCE) has an effect on market valuation as measured by MB as well as profitability as measured by ROE. Interestingly, negative correlations were observed between Human Capital Efficiency (HCE) and the financial indicators which, perhaps, were due to the existence of a gap between the traditional accounting perspective and value creation perspective which is central to the VAIC™ methodology in measuring IC. It is believed that the empirical results of this research have provided some new insights to the stakeholders of Hong Kong companies in utilizing IC, particularly the noted impact of structural capital. While physical and financial assets, still, appears to be taking on an important role as the key resources in delivering business success, IC, or to be exact, structural capital may be silently making headway into the fabric of Hong Kong’s economy as illustrated by its impact in delivering return on equity (ROE).-
dc.languageengen_US
dc.publisherAcademic Publishing Limited.-
dc.relation.ispartofProceedings of the 7th International Conference on Intellectual Capital, Knowledge Management & Organisational Learningen_US
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.rightsAuthor owns CopyRight-
dc.subjectIntellectual capital-
dc.subjectVAIC™-
dc.subjectFinancial performance-
dc.subjectValue creation-
dc.subjectHang Seng Index-
dc.subjectHong Kong-
dc.titleAn empirical study of the impact of intellectual capital performance on business performanceen_US
dc.typeConference_Paperen_US
dc.identifier.emailYu, KY: yukayin1212@yahoo.com.hken_US
dc.identifier.emailNg, HT: tai0119@hotmail.com-
dc.identifier.emailWong, WK: kwan 118@hotmail.com-
dc.identifier.emailChu, SKW: samchu@hku.hk-
dc.identifier.emailChan, KH: hkukin@hku.hk-
dc.identifier.authorityChu, SKW=rp00897en_US
dc.description.naturepostprint-
dc.identifier.hkuros188472en_US
dc.identifier.spage70-
dc.identifier.epage71-
dc.publisher.placeUnited Kingdom-
dc.description.otherThe 7th International Conference on Intellectual Capital, Knowledge Management & Organisational Learning (ICICKM 2010), Hong Kong, China, 11-12 November 2010. In Proceedings of the 7th ICICKM, 2010, p. 70-71-

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