THE IMPACT OF INTELLECTUAL CAPITAL ON FIRM VALUE: A COMPARATIVE STUDY OF CONSUMER SERVICES COMPANIES AND CAPITAL GOODS COMPANIES LISTED IN CSE

Dharmakeerthi, M.M.K.S. and Ranjani, R.P.C.

Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Kelaniya, Sri Lanka

kusalanidharmakeerthi@gmail.com, chitra@kln.ac.lk

ABSTRACT

In the modern economic era, Intellectual capital (IC) is a key competitive advantage for a company. Thereby, this study is conducted to investigate the impact of Intellectual Capital and its components on the firm value in Consumer Service Sector and Capital Goods Sector companies listed in Colombo Stock Exchange (CSE) in Sri Lanka. The study is done as a comparison between these two sectors. It examined the data for the period from 2015 to 2020 based on the sample of 25 companies in Consumer Service Sector and 20 companies in Capital Goods Sector by usingtwo regression models in random effect. Dependent variable for the study is Firm value and independent variables are Intellectual capital, capital employed efficiency, human capital efficiency and structural capital efficiency. The measurement of the Intellectual capital is Value Added Intellectual Coefficient (VAIC) andmarketto book value (MB) is used as the measurement of the firm value of the companies in both sectors. The data gathered from both sectors is analyzed using descriptive statistics, correlation analysis and regression analysis. The results and findings of the study evident that, the intellectual capital has a positive impact on the firm value in both the consumer service sector and capital goods sector companies. However, when consider the component wise impact of intellectual capital, capital employed efficiency (CEE) has a positive impact on the firm value and human capital efficiency (HCE) and structural capital efficiency (SCE) have not a positive impact on firm value in both sectors. The findings of the study contribute to identify the impact of intellectual capital on the firm value in two sectors in the Sri Lanka economy. The results are significant for shareholders, owners, managers, employees, and all stakeholders. Especially, it is significant for the investors for their decisions on investments. In addition, companies could make investment decisions on Intellectual Capital to get competitive advantages and face market challenges and competition.

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