Nexus between intellectual capital and Firms’ Performance: Evidence from the Indian Companies

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Ms. Suman, Dr. Satpal

Abstract

In the industrialised world, intellectual capital (IC) has acquired respect for boosting the value of businesses and gaining a competitive advantage. Information, knowledge, copyrights, and patents, research and development, human capital, and invention are all examples of intellectual capital (IC), which is also known as intangible assets. According to Forbes, more than 80% of a company's value is generated through inventions and intangibles. In the early days of business, tangible assets were the primary source of corporate value, while intangible assets played a minor role and were mostly used to estimate brand value. However, the current situation has shifted, with intangible assets now accounting for 80% of total assets, because of its growing and developing relevance, corporate value has increased. This paper aims to analyze the association between the intellectual capital efficiency of Nifty 100 companies and market performance over a period of ten years (2009-10 to 2018-19). The study utilized VAIC and the panel regression analysis models for data scrutiny.  The study shows that the VAIC market performance of nifty companies is significantly associated with it & human capital or capital effectiveness is significantly associated with market performance (M/B), and structural capital also demonstrates a meaningful relation to the market performance of the listed corporations (M/B). Leverage that contributes more to market values is one of the control factors, although corporate size does not play a significant part in exhibiting market performance progression. Finally, the study revealed that intellectual capital (VAIC) and its dimensions are associated with the market performance of selected firms.

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