we know that intellectual capital play a key role in enhancing firm financial performance,but how can we measure it.
Dear Sanjeev Bansal
Greetings,
Please , find the two attached files about the ways to judge the impact of intellectual capital may related for your topic ,
Best Regards,
Firer, S., & Mitchell Williams, S. (2003). Intellectual capital and traditional measures of corporate performance. Journal of intellectual capital, 4(3), 348-360.
Chen, M. C., Cheng, S. J., & Hwang, Y. (2005). An empirical investigation of the relationship between intellectual capital and firms' market value and financial performance. Journal of intellectual capital, 6(2), 159-176.
One of the impact of the investment in intellectual capital can be seen from the increase in firm value. We may use value relevance methodology to investigate this. Based on Ohlson (1995) model MVE = a + b1BVE + b2E where MVE is market value of equity, BVE is book value of equity and E is earnings. The intellectual Capital can be extracted from BVE which is also equal to net asset. The new model will be MVE = a + b1(BVE - IC) + b2IC + b3E where IC is intellectual capital.
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