Open AccessIMPACT OF INTELLECTUAL CAPITAL ON CORPORATE FINANCIAL PERFORMANCE: AN EMPIRICAL EVIDENCE FROM PHARMACEUTICAL SECTOR OF PAKISTAN
Author(s) -
Amber Qadar,
Muhammad Makki,
Muhammad Athar Hussain
Publication year - 2015
Publication title -
journal of social sciences and humanities
Language(s) - English
Resource type - Journals
eISSN - 2664-4967
pISSN - 0257-4276
DOI - 10.46568/jssh.v54i2.122
Subject(s) - intellectual capital , structural capital , return on equity , return on assets , stock exchange , business , profitability index , return on capital employed , accounting , return on capital , book value , order (exchange) , audit , finance , economics , financial capital , human capital , capital formation , individual capital , earnings , economic growth
The basic purpose of this study is to analyze the impact of intellectual capital on corporate financial performance. This study is conducted on pharmaceutical sector listed in Pakistan Stock Exchange. Data for this study was collected from audited annual financial statements of selected business organizations over period of ten year i.e. from 2005-2014. Value Added Intellectual Coefficient (VAIC) methodology is employed, in order to measure IC (Intellectual Capital) and its different components. The firm’s financial performance is measured by using profitability measures including ROE (Return on Equity) and ROA (Return on Assets), market to book value and asset turnover. In order to analyze the collected data, the Partial Least Square (PLS), a SEM (structural equation modeling) technique. These approaches are used to assess the measurement and structural models. The results of analysis have supported the proposed hypothesis i.e. there is significant positive impact of intellectual capital on firm’s financial performance among pharmaceutical industries of Pakistan.