| Abstract |
The aim of the paper is to explore the impact of intellectual capital on financial performance of firms in construction, finance and plantation using value-added intellectual coefficient (VAIC) model. The empirical data were drawn from a panel consisting of 108 firms listed in Bursa Malaysia from 2011 to 2015. Intellectual capital is the independent variable in the study and measured by HCE, SCE, CEE, VAIC. Meanwhile, the dependent variable, financial performance, is proxy by ROA. The findings revealed significant and positive association between intellectual capital and financial performance in construction and finance. Whereby, in plantation, the result indicated significant but negative association. On the components of intellectual capital, the findings revealed that firms in finance employ human capital and structural capital to create value. On the contrary, a negative relationships were documented between human capital, structural capital and financial performance in construction and plantation. Nevertheless, the result indicated that capital employed is significant and positively associated with financial performance in all the three industries implying that physical capital remain the most influential value drivers in generating firms' profitability regardless of the industries type. The study findings have a practical contribution as it establishes suggestions for firms' managers to make legitimate decisions concerning investments on the components of intellectual capital that can foster business growth and sustainable competitive advantage. The data is drawn from three industries only, thus it may limit the generalisation of the findings which become the main limitation of this study. |