Intellectual Capital and Financial Performance: Indian Evidence

In the current era of information technology, knowledge is a dominating resource. The accelerated entry of the businesses into the knowledge-based era has attracted the attention of the investors towards Intellectual Capital. The present study is an attempt to examine the intellectual capital performance of 70 companies operating in India during 2010-2015.The association of intellectual capital performance of these companies, with their financial performance, as measured by Return on Assets, Return on Equity & Market to Book Value has been analysed. Value Added Intellectual Coefficient (VAIC) model given by Public was used to measure intellectual performance and its association with the financial performance using Panel Regression Analysis, incorporating Random effects in the model. The findings of the study suggest that intellectual capital has a significantly positive impact on companies' ROA & ROE, where as it failed to reveal its impact on companies' Market Value. Further, other components of intellectual capital; Human Capital Efficiency and Capital Employed Efficiency were found to be having a positive impact on companies" ROA and ROE. On the other hand Capital Employed Efficiency failed to reveal any association with companies' Market-to-Book value. In addition to these the Structural Capital Efficiency indicated positive relationship with the companies' ROE