The incremental impact of intellectual capital on value creation

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Abstract:

Purpose ‐ The purpose of this paper is to examine the validity of the Ohlson model and to explore the influence of intellectual capital (IC) on corporate value (V) and value creation (VC) in order to develop a business valuation model served as the managerial criterion of IC. Design/methodology/approach ‐ Hypotheses are based on current research on the Ohlson model and IC. Descriptive statistics are used to find the data patterns. Information content and incremental information provided by various capital sources are validated through multiple and stepwise regression. Findings ‐ Corporate value is measured by both IC and financial capital (FC). The Ohlson model with FC reveals information that is significant in corporate value. Besides, FC and IC ‐ mainly, innovation and human capital ‐ contains a great deal of incremental information in terms of V and VC. Research limitations/implications ‐ In addition to financial statement, IC must be taken into account when intending to do business valuation. Practical implications ‐ To create higher corporate value, corporations must actively place a high premium on their IC and manage it well, particularly for innovation and human capital. Originality/value ‐ This paper focuses on the information technology industry in Taiwan. It, respectively, uses the share price and price and book value models to represent V and VC. It cites the more complete four aspects of IC, which are referred to as "other information", to combine IC and the Ohlson model.

Keywords: Intellectual capital; Share prices; Taiwan; Value analysis

Document Type: Research Article

DOI: http://dx.doi.org/10.1108/14691930910952650

Publication date: April 17, 2009

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