IMPACT OF INTELLECTUAL CAPITAL ON FINANCIAL PERFORMANCE OF PUBLIC LISTED MANUFACTURING COMPANIES IN SRI LANKA

Abstract

Today, the use of intangible assets has a huge effect on the organizations' performance and sustainability, so that it creates a new area of management study and analysis. One of the most important intangible assets that have been studied is intellectual capital and its derivatives. In this respect, the study has been conducted using data drawn from 2015 to 2019 from public listed manufacturing companies in Sri Lanka. The Modified Value Added Intellectual Capital Coefficient (M-VAIC) has been employed to measure the Intellectual Capital Efficiency together with the measurements of value creation efficiencies of capital employed, human capital, structural capital and Relational Capital of selected firms. The researchers use Pearson’s correlation analysis and construct panel regression models to investigate the said relationships. The results of the main analysis show that IC is positively associated with Human Capital Efficiency and Capital Employed Efficiency. Also, it is found that the Structural Capital Efficiency and Relational Capital Efficiency has an insignificant association with financial performance.