Intellectual Capital and investment opportunity set in Advanced Technology Companies

Copyright © 2015 ISSR Journals. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. ABSTRACT: The purpose of this study is to empirically examine the role of intellectual capital in creating investment opportunity set (IOS) in an advanced technology setting using a sample of 138 Malaysian listed manufacturing companies during the 2006-2011 period. Value Added Intellectual Coefficient (VAIC™) is adopted as the measure of intellectual capital efficiency while factor analysis is used to construct an index of investment opportunity set (IOS) from three price-based growth variables. The preliminary analysis finds VAIC ™ and its individual components are significantly higher in advanced than in low technology companies. The fixed effect panel regressions provide statistical evidence that the influences of VAIC and its components on IOS are stronger in advanced than in low technology companies. The positive effect of intellectual capital on IOS implies that companies can benefit immensely from spending on their human capital because this investment adds value to their companies