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The Impact of Intellectual Capital and Ownership Structure on Firm Performance

Author

Listed:
  • Znar Ahmed

    (Tunku Puteri Intan Safinaz School of Accountancy (TISSA-UUM), Universiti Utara Malaysia (UUM), Sintok 06010, Kedah, Malaysia)

  • Muhammad Rosni Amir Hussin

    (Tunku Puteri Intan Safinaz School of Accountancy (TISSA-UUM), Universiti Utara Malaysia (UUM), Sintok 06010, Kedah, Malaysia)

  • Kashan Pirzada

    (Tunku Puteri Intan Safinaz School of Accountancy (TISSA-UUM), Universiti Utara Malaysia (UUM), Sintok 06010, Kedah, Malaysia)

Abstract

Even though several studies have been done on intellectual capital, ownership structure, and firm performance, their status has remained uncertain in developing countries like Malaysia. Prior studies have generally focused on a single industry and overlooked the input of all Malaysian non-financial firms. This study investigates the impact of intellectual capital, its components, and ownership structure on firm performance. This study employs a balanced panel data examination for the data of 409 non-financial firms from 11 sectors listed on Bursa, Malaysia for five years (2016–2020). The modified value-added intellectual coefficient model was applied to examine the effect of IC efficiency on firm performance. The empirical findings revealed that IC efficiency, human capital efficiency, structural capital efficiency, capital employed efficiency, and relational capital efficiency are positively and significantly related to firm performance. However, physical and structural capital is the most substantial element of intellectual capital efficiency in augmenting profitability. In addition, government and foreign ownership positively affect firm performance. The research will help managers, policymakers, and investors understand how IC investments increase performance and make prudent investment choices in government and foreign ownership firms.

Suggested Citation

  • Znar Ahmed & Muhammad Rosni Amir Hussin & Kashan Pirzada, 2022. "The Impact of Intellectual Capital and Ownership Structure on Firm Performance," JRFM, MDPI, vol. 15(12), pages 1-15, November.
    • Handle: RePEc:gam:jjrfmx:v:15:y:2022:i:12:p:553-:d:983953
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    References listed on IDEAS

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    1. Dahlquist, Magnus & Robertsson, Goran, 2001. "Direct foreign ownership, institutional investors, and firm characteristics," Journal of Financial Economics, Elsevier, vol. 59(3), pages 413-440, March.
    2. Tian, Lihui & Estrin, Saul, 2008. "Retained state shareholding in Chinese PLCs: Does government ownership always reduce corporate value?," Journal of Comparative Economics, Elsevier, vol. 36(1), pages 74-89, March.
    3. Muhammad Nadeem & Christopher Gan & Cuong Nguyen, 2018. "The Importance of Intellectual Capital for Firm Performance: Evidence from Australia," Australian Accounting Review, CPA Australia, vol. 28(3), pages 334-344, September.
    4. Aziz Jaafar & Lynn Hodgkinson & Mao-Feng Kao, 2019. "Ownership Structure, Board of Directors and Firm Performance: Evidence from Taiwan," Working Papers 19011, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).
    5. Hapsah S. Mohammad & Imbarine Bujang & Taufik Abd. Hakim, 2018. "The Impact of Intellectual Capital on Financial Performance of Malaysian Construction Firms," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 8(5), pages 173-186, May.
    6. Siew-Peng Lee & Shaiban Mohammed, 2014. "Intellectual capital on listed agricultural firms' performance in Malaysia," International Journal of Learning and Intellectual Capital, Inderscience Enterprises Ltd, vol. 11(3), pages 202-221.
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    Cited by:

    1. Pearl Abredu & Cai Li & Frank Kofi Essien & Isaiah Agbenu Akanbi Adegoke, 2023. "Unleashing Potential: Overcoming Bottlenecks and Catalyzing Innovations in Intellectual Capital Intellectualization of Small and Medium-Sized Enterprises in Jiangsu During the Post-Industrial Era," SAGE Open, , vol. 13(4), pages 21582440231, December.
    2. Monika Barak & Rakesh Kumar Sharma, 2024. "Does intellectual capital impact the financial performance of Indian public sector banks? An empirical analysis using GMM," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-11, December.
    3. Nguyet Thi Nguyen, 2023. "The Impact of Intellectual Capital on Service Firm Financial Performance in Emerging Countries: The Case of Vietnam," Sustainability, MDPI, vol. 15(9), pages 1-19, April.
    4. Vincenzo Scafarto & Tamanna Dalwai & Federica Ricci & Gaetano della Corte, 2023. "Digitalization and Firm Financial Performance in Healthcare: The Mediating Role of Intellectual Capital Efficiency," Sustainability, MDPI, vol. 15(5), pages 1-16, February.
    5. Md. Sohel Rana & Syed Zabid Hossain, 2023. "Intellectual Capital, Firm Performance, and Sustainable Growth: A Study on DSE-Listed Nonfinancial Companies in Bangladesh," Sustainability, MDPI, vol. 15(9), pages 1-23, April.

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