Open AccessIntellectual Capital, Political Uncertainty and Firm Performance: Evidence from Pakistan
Author(s) -
Farheen Zahra Hussain,
Ayub Khan Mehar
Publication year - 2021
Publication title -
journal of business and social review in emerging economies
Language(s) - English
Resource type - Journals
eISSN - 2519-089X
pISSN - 2519-0326
DOI - 10.26710/jbsee.v7i2.1645
Subject(s) - intellectual capital , stock exchange , originality , politics , relational capital , value (mathematics) , physical capital , moderation , political capital , variables , business , regression analysis , human capital , economics , enterprise value , accounting , econometrics , classical economics , finance , psychology , economic growth , statistics , political science , social psychology , mathematics , creativity , law
This research has examined the impact of Intellectual Capital (IC) on performance of the firms in Pakistan while considering political uncertainty as moderating variable. The research used secondary data of firms, related to manufacturing sectors, listed in Karachi Stock Exchange - KSE 100 Pakistan for a ten-year period of 2010-2019. Value Added Intellectual Coefficient (VAIC) model by Pulic (1998) has been used to calculate IC and its components and ROA is used to measure firm’s performance. Regression Model has been employed to investigate the hypothetical relationship between IC and firm performance. Results of this paper revealed that CEE and CCE have a positive relationship with the financial performance of firms in Pakistan whereas SCE has negative effect on the financial performance of the firms. Furthermore, the findings suggest political instability as a significant moderating variable on the relationship among intellectual capital, its components and firms’ performance. This research is the first attempt in investigating the relative importance of intellectual capital success of any firm under political uncertainty.