Influence of Intellectual capital disclosure on firm performance: empirical evidence from top Indian companies

This study analyzes the impact of intellectual capital disclosure (ICD) on the firm's financial performance (FP) by developing a comprehensive ICD index. The study measures ICD based on content analysis of NSE-listed firms and employs Partial Least Squares - Structural Equation Modelling (PLS-SEM) to analyze the relationship. The study reveals that, although ICD has an insignificant impact on ROA, it positively impacts the firm's market capitalization. Among the components of ICD, Structural capital, and Relational capital disclosure positively contribute to the relationship, while Human capital disclosure negatively impacts FP. The result can assist companies in identifying the specific components of intellectual capital driving FP, allowing them to focus their efforts and resources more effectively. These insights can aid firms in making strategic decisions regarding intellectual capital management and disclosure practices, potentially leading to improved FP. The originality of our research lies in the fact that while the literature on this relationship is scarce, with no study in the Indian context, our study provides a realistic conclusion to the ICD-FP relationship and adds value to the current intellectual capital-driven competitive market.