Open AccessIntellectual Capital Efficiency and Firm Performance of Technology, Telecommunication and Media Companies in Malaysia
Author(s) -
Ahmed Sharem
Publication year - 2020
Publication title -
unimas review of accounting and finance
Language(s) - English
Resource type - Journals
ISSN - 2590-3543
DOI - 10.33736/uraf.2312.2020
Subject(s) - return on equity , return on assets , intellectual capital , profitability index , business , structural capital , return on capital employed , human capital , industrial organization , finance , financial capital , economics , capital formation , individual capital , economic growth
The main purpose of this paper is to study the association between intellectual capital efficiency (ICe) and firm performance of companies in the Technology and Telecommunications & Media (TT&M) sectors on the Malaysian main and ACE markets. Data were collected from 37 companies’ annual reports for the year 2018. Value added intellectual coefficient (VAIC) and its components were measured using Pulic’s model, whereas firm performance focuses on profitability, proxied by return on asset (ROA) and return on equity (ROE). VAIC, human capital efficiency (HCe) and Capital employed efficiency (CEe) are associated with significantly higher ROA and ROE. However, Structural capital efficiency (SCe) is not significant with either ROA or ROE. These findings have useful implications to the TT&M companies as their managers may improve on the efficient usage of the relevant capitals in order to gain better firm performance. Moreover, the findings of this study could also be beneficial to policy makers as the financial success of TT&M companies would be in line with national economic policies.