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Does Intellectual Capital Affect Financial Leverage of Chinese Agricultural Companies? Exploring the Role of Firm Profitability

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  • Guangchun Jin

    (Department of Economics and Management, Qingdao Agricultural University, Qingdao 266109, China)

  • Jian Xu

    (Department of Economics and Management, Qingdao Agricultural University, Qingdao 266109, China)

Abstract

The objective of this paper is to examine the relationship between intellectual capital (IC) and firms’ financial leverage by exploring whether firm profitability mediates this relationship, using a dataset of Chinese agricultural listed companies during the period of 2014–2020. Financial leverage is measured by the debt-to-asset ratio, and IC is measured via the modified value-added intellectual coefficient (MVAIC) model. The results reveal that financial leverage is lower in firms with higher levels of IC, and IC positively affects firm profitability. In addition, firm profitability partially mediates the relationship between IC and financial leverage. When MVAIC is disaggregated into its four components, firm profitability has a partially mediating effect on the relationship between physical and human capitals and financial leverage. This paper might provide corporate managers with a clear understanding of IC’s impact on firm indebtedness.

Suggested Citation

  • Guangchun Jin & Jian Xu, 2022. "Does Intellectual Capital Affect Financial Leverage of Chinese Agricultural Companies? Exploring the Role of Firm Profitability," Sustainability, MDPI, vol. 14(5), pages 1-14, February.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:5:p:2682-:d:758279
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    Cited by:

    1. Lujing Liu & Jiyue Zhang & Jian Xu & Yiqun Wang, 2022. "Intellectual Capital and Financial Performance of Chinese Manufacturing SMEs: An Analysis from the Perspective of Different Industry Types," Sustainability, MDPI, vol. 14(17), pages 1-17, August.
    2. 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.
    3. 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.
    4. Bojan Krstić & Ljiljana Bonić & Tamara Rađenović & Milica Jovanović Vujatović & Jasmina Ognjanović, 2023. "Improving Profitability Measurement: Impact of Intellectual Capital Efficiency on Return on Total Employed Resources in Smart and Knowledge-Intensive Companies," Sustainability, MDPI, vol. 15(15), pages 1-18, August.
    5. Ngoc Phu Tran & Co Thi Huyen Dinh & Hien Thi Thu Hoang & Duc Hong Vo, 2022. "Intellectual Capital and Firm Performance in Vietnam: The Moderating Role of Corporate Social Responsibility," Sustainability, MDPI, vol. 14(19), pages 1-13, October.

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