IMPACT OF INTELLECTUAL CAPITAL ON FINANCIAL PERFORMANCE OF INSURANCE INDUSTRY IN SRI LANKA

Abstract

Today’s business world is very competitive than the past few decades. There are some improvements in current economy. Information and communication technology and new knowledge are the deriving knowledge based economy. Nowadays new knowledge plays a major role in globally. Intellectual capital takes as an important concept (important asset) for an organization to achieve their competitive advantage and sustainable corporate performance of a company. Normally, wealth of the organization and economy depends on the intangible assets. Normally, Intellectual capital recognizes as an intangible asset of a company but intellectual capital is an asset but not recognized in the balance sheets of an organization. This study emphasized that, importance of modified intellectual capita on the financial performance of insurance companies in Sri Lanka. Therefore, the main objective of this research is to identify the impact of modified value added intellectual capital on financial performance of insurance industry in Sri Lanka. This research was created using a quantitative methodology and only used secondary source for data collection. Data collected from the audited annual report of seven insurance companies with the period of 2011-2018. The panel data regression analysis used as a main analytical method and STATA used as main analytical tools of this study. As a result of this study, In contrast, there is a significant and positive impact of modified intellectual capital on financial performance of insurance industry in Sri Lanka. Further, this study concluded and found that, Human capital, structural capital, relational capital and capital employee have positive and significant impact to return on asset in an insurance company. These findings also suggested that importance of a modified value added intellectual capital of an insurance company.