IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-20-00523.html
   My bibliography  Save this article

Building firm value and financial performance through intellectual capital: the Indonesia stock exchange's experience

Author

Listed:
  • Muhammad Madyan

    (Faculty of Economics and Business, Airlangga University)

  • Iksan Abdi Nugraha

    (Faculty of Economics and Business, Airlangga University)

  • Wisudanto Wisudanto

    (Faculty of Economic and Business, Airlangga University)

  • Rahmat Setiawan

    (Faculty of Economics and Business, Airlangga University)

  • Novian Abdi Firdausi

    (Faculty of Economics and Business, Airlangga University)

Abstract

This study aims to assess the effect of intellectual capital and its components on firm value and financial performance. Using sample firms on each sectors in the Indonesian Stock Exchange within 2014-2018 time period, intellectual capital is measured through VAIC™ and its components which are capital employed efficiency (CEE), human capital efficiency (HCE), and structural capital efficiency (SCE). While firm value and financial performance is measured through market-to-book value (MBV) and return on equity (ROE) respectively. Results of the study indicate that VAIC™ alone has a significant positive effect on MBV and ROE. CEE and HCE also have a positive significant effect on both MBV and ROE, but SCE has an insignificant but mixed effect with negative effect on MBV and positive effect on ROE. This result may be attributed to bad business cycle and major financial restatements within study period. Control variables such as firm size and leverage both have a positive effects with firm size has a significant effect while leverage is insignificant to firm value and financial performance.

Suggested Citation

  • Muhammad Madyan & Iksan Abdi Nugraha & Wisudanto Wisudanto & Rahmat Setiawan & Novian Abdi Firdausi, 2022. "Building firm value and financial performance through intellectual capital: the Indonesia stock exchange's experience," Economics Bulletin, AccessEcon, vol. 42(2), pages 294-302.
    • Handle: RePEc:ebl:ecbull:eb-20-00523
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/Pubs/EB/2022/Volume42/EB-22-V42-I2-P27.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Financial performance; firm value; indonesia stock market; intellectual capital;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-20-00523. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John P. Conley (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.