Open AccessThe Relationship between Intellectual Capital and Income Smoothing and Stock Returns
Author(s) -
Hamidreza Vakilifard,
Masoumeh Sadat Rasouli
Publication year - 2013
Publication title -
financial assets and investing
Language(s) - English
Resource type - Journals
eISSN - 1804-509X
pISSN - 1804-5081
DOI - 10.5817/fai2013-2-3
Subject(s) - intellectual capital , smoothing , economics , earnings , stock (firearms) , human capital , accrual , physical capital , labour economics , sample (material) , monetary economics , financial economics , econometrics , accounting , finance , market economy , mechanical engineering , chemistry , chromatography , computer science , engineering , computer vision
This article examines the relationship between intellectual capital, income smoothing and stock returns. We are capturing income smoothing through total accruals. Income smoothing firms have significantly higher abnormal returns around earnings announcement. In the knowledge economy, intellectual capital has become one of the primary sources of competitive advantage for a firm. Given the remarkable shift in the underlying production factors of a business within the new knowledge economy, it is important for firms to be aware of the elements of intellectual capital that would lead to value creation. So we associated relationship between intellectual capital and income smoothing and stock returns. The sample includes 108 firm-year observations from 2006 to 2011.We have used five variables: three variables to measure IC, and two variables to measure stock returns and income smoothing. Initial data analyses were conducted through SPSS. The results of our study showed that there was relationship between physical capital and stock returns but they did not provide support for the positive relationship between structural capital, human capital and firm’s financial performance