Intellectual Capital Efficiency and Corporate Financial Performance

Abdul Rafeh; Waqas Ahmed; Dr. S. M. Amir Shah; Dr. Qaisar Ali Malik

doi:10.33897/fujbe.v2i1.116

Abdul Rafeh Army Public College of Management Sciences (APCOMS), Rawalpindi, Pakistan
Waqas Ahmed Army Public College of Management Sciences (APCOMS), Rawalpindi, Pakistan
Dr. S. M. Amir Shah Allama Iqbal Open University, Islamabad
Dr. Qaisar Ali Malik Foundation University Rawalpindi Campus, Pakistan

DOI: https://doi.org/10.33897/fujbe.v2i1.116

Keywords: Intellectual Capital Efficiency, Financial Performance, Human Capital Efficiency, Structural Capital Efficiency, Capital Employed Efficiency

Abstract

The focus of this study is to investigate the linkages between the intellectual capital and the financial performance in manufacturing companies of Pakistan. For the purpose of this study financial data of 46 selected manufacturing companies were collected from their financial statements, covering the year 2011 through 2015. Both descriptive and inferential statistics were used to generalize the results. Intellectual capital performance is measured by Value Added Intellectual Coefficient (VAIC™) that is comprised of human capital efficiency, structural capital efficiency and capital employed efficiency. The financial performance is measured through return on assets, return on equity, return on investments and earnings per share. The results showed that the intellectual capital has significant effect on the financial performance of the manufacturing firms.