An Empirical Investigation of the Impact of Intellectual Capital on Firms’ Market Value and Financial Performance: Evidence from Iranian Companies

In modern economics, Intellectual capital is described as an intangible asset which can be used as a source of sustainable competitive advantage. However, intellectual capital components have to interact with each other to create value. The paper aimed at examining the impact of intellectual capital on the market value and the financial performance of the firms. The efficiency of the value added by corporate intellectual ability (Value Added Intellectual Coefficient) was incorporated to measure the intellectual capital construct. The analyses were performed using data derived from the financial statements of 28 firms listed on the Tehran Stock Exchange (TSE) during a four-year period from 2006 to 2009. Correlation and Ordinary Least Square (OLS) regressions have been carried out on panel data to check the impact of intellectual capital on firms’ market value and financial performance. While the findings of the study failed to support most of the hypotheses it was shown that there was a statistically significant relationship between structure capital efficiency and financial performance (ROE, ROA). Despite the fact that intellectual capital has increasingly been recognized as an important strategic asset for sustainable corporate competitive advantages, the results of the present study raised new arguments and indicated the need for further research on the subject.