Intellectual Capital and Firms¡¯ Financial Performance: A European Empirical Study????

The current study seeks to analyse the impact of the intellectual capital (IC) on the financial performance measured by Return on Assets in the European context for the period 2004-2015. This study uses data of non-financial listed firms of 8 European countries for the period between 2004 and 2015. Considering that financial crisis had different impact on European countries, we divided the eight countries in two groups: (1) group 1 ¨C Greece, Portugal, Spain and Italy; and (2) group 2 ¨C Germany, France, Finland and United Kingdom (UK). The estimation method used is the GMM system (1998) estimator, as a dynamic panel estimator, which allows to do longitudinal studies and to analyse the effect of lagged explanatory variables on firms¡¯ financial performance. The results indicate that IC efficiency in the current period has a positive impact on financial performance. The three components of VAICTM Model - capital employed efficiency, human capital efficiency and structural capital efficiency in the current period have a positive impact on financial performance, with the exception for structural capital efficiency which for the first group of countries has a negative impact on financial performance. Finally, results suggest that the financial crisis negatively affects financial performance on both groups of countries. The current study contributes to the current literature, analysing the impact of IC on firms¡¯ financial performance in two groups of European countries which suffered the consequences of the 2008 crisis differently.