Impact of intellectual capital on the financial performance of listed companies in Tehran

Stock Exchange

Abstract
Economical special conditions in to active companies has been caused competitive benefit in
these companies don,t be base on tangible asset of them. What that is the cause of competition
in these companies economically nowadays are intangible assets and on the other hand, they
are intellectual capital. Because of this type of intangible assets and capitals hasn ,t been
written in the balance sheet and of course, they have significant effects in the performance,
value and profitability, it needs to consideration, allocation of sources and emphasis of senior
managers in the organization increasingly.
In this research we tried to examine the impact of intellectual capital on financial performance
of companies. For this purpose, the CIV method (Calculated Intangible Value) and ICE
(efficiency of intellectual capital) for measuring the extent of the intellectual capital and use
efficiency of the intellectual capital in companies and it has been studied the effect of the
intellectual capital on the ratios of ROE (Return On Equity) and ROA (Return On Assets) and
ROS (Return On Sales).
For this purpose, it has been chosen in the stock exchange in Tehran 170 Companies in the
time space from 2003 to 2007, accidently and necessary data of the research has been
collected from the financial statements of mentioned companies. The main and sub-
Hypotheses of the research has been confirmed by use of statistical methods whit 95%
confidence coefficient by SPSS Software.

Keywords: intellectual capital, knowledge management, intangible assets, financial

performance of organizations

Introduction
Traditional methods of accounting that is based on tangible assets, isn’t enough for measuring
of intellectual capital that it is the biggest and the worthiest intangible asset of organization,
The new major of intellectual asset is a new research area for researcher and investigator of
organization that focus on create mechanism of new measurement for reporting of important
intangible variable as human capital, customer satisfaction and innovation.
Absence of sufficient vision and possibility of compare between firms and also increase of
distance between market value and accounting value of firms have caused appearance of
systematic errors at share price of firm and fluctuations more than extent at stock market and
have caused decision power of investors and managers be in dangerous , so , it is need today
that one method is used for measuring of this important section of firm capital (intellectual
capitals) and study of its influence on firm value and determination of fair value of stock at
market.
In this research, we engage in study of intellectual capital and it’s compounded elements and
also study of intellectual capital influence on financial performance (capacity of value
creation) accepted firm at Tehran’s securities exchange with use of Calculated intangible
value model.

Review of literature

The first experience study for measuring of intellectual capital was performance by Swedish
association in middle of decade 1980 and after then, very research have done for
determination state of firms intellectual capital in countries and between countries
documented research indicate effort for placing intellectual capital into firm balance sheet, is
a researchable concept and performance research indicate this subject is perfectly scientific.
Abeysekera Indra (2005), Olsson, B (2001), Brennan N. (2001).
Francisco aguar and colleagues examined value added theory of intellectual capital by
research in 2009 in making machinery and equipment firms in Brazil that have more than 100
Employer in duration 2000-2006. Overall results of research showed model VAIC is
appropriate for description of value creation in Brazilian firms.
Richeri and colleagues did a research amoung 1000 big firms of Brezile in the period of 2000-
2005 in 2008. In this research, researchers have used accounted intangible assets value (CIV)
and intellectual capital efficiency (ICE) for measuring market value of intellectual capital and
their current. Result of research indicate a positive relation between two parameters CIV, ICE
and depending variable mean, return rate of share bolder’s equity (ROE) and assets output
rate (ROA) and sale output rate (ROS).
Tan, Pleman and Hankok (2007) in their research- have investigated relation of intellectual
capital with firms financial output result show that first there is a meaningful positive relation
between intellectual capital and firm financial output of presence and future second influence
of intellectual capital is different in firms Financial output in different industries.

Data and Research

This research has performanced in the library methods. Research data collected by reference
to organization website of Tehran’s securities exchange from financial statements, study
firms. Statistical community of research include: 298 firms that with use of sampling in the
random method and Cohran formol – 170 firms as sample studied in the period of 2003-2007.

Research
Methodology
This research is descriptive and in terms of purpose, is applied. This study was conducted
using a library And theoretical study of various books and articles were obtained. Research
data, financial statements of listed companies in Tehran Stock Exchange was collected.
Realm of spatial research is all manufacturing and industrial companies listed in Tehran Stock
Exchange and Realm of research time, is the period between 2003 and 2007.
Data analysis
According to the study, the relationship between independent variables and dependent
variables in the following three cases are investigated:

Simple relationship between independent variables and dependent variables

Study findings related to simple variables with the dependent variable is presented in the table
(1).

Table1: Simple correlation coefficients of independent variables and dependent variables

As the table (1) is observed, the findings revealed that the variable CIV (calculated intangible
value) with variable ROE (Return on Equity) at P <0.025 significant relationship exists. Thus
the first Hypothesis H0 is rejected and otherwise Assume to be confirmed. There is a positive
relationship between independent variable (ICE) and the dependent variable (ROE) in the P
<0.05 significant. There is a positive relationship between independent variable (ICE) and the
dependent variable (ROS) in the P <0.01 significant. There is a positive relationship between
variable (CRESC-VENDAS) and the dependent variable (ROE) in the P <0.01 significant.
There is a positive relationship between variable (CRESC-VENDAS) and the dependent
variable (ROS) in the P <0.042 significant.

Discussion
Present findings in Tables 2 to 7 is given, shows that the only variables CIV, ICE and
CRESC-VENDAS have positive effect on the ROE and there is a significant relationship with
the ROE. The variable CRESC-VENDAS coefficient of 0.155 can explain ROE better than
the other variables. Also ICE variable, and CIV, respectively 1.3 and 1.1% of the variance
Explanation the ROE variable indicating that the efficiency of intellectual capital and
intellectual capital to increase returns on equity have a positive impact but this variable effect
is not so high.
The results of this study indicate that the multiple regression equation with dependent variable
ROA, the sample studied, no correlation has been found between independent variables and
the dependent variable (ROA).
The results of this study indicate that the multiple regression equation (the dependent variable
ROS), ICE has positive impact at the level of P <0.01 significant relationship with the
dependent variable ROS.

Conclusion
as we mentioned, in study case sample. Variable CIV have positive influence on variable
ROE (it is one of index and criterion of value create capacity in firms) and on variables ROS,
ROA don’t have any influence. So assumption zero of hypothesis (1) is rejected and its value
creative capacity in firms, that this result is accord with theory evidence and approve study
finding and theory also present research results indicate independent variable ICE (intellectual
capital efficiency) has positive influence on depend variables ROE and ROS and has a
meaning full relation with this variables- so can say that intellectual capital efficiency have
influence on value create capacity in firms. Therefore assumption zero of hypothesis (2) also
is rejected and opposite assumption is approved, that this finding accorded with study
evidence and subject theory and approve them.
 However obtained result of this research, don’t indicate significant influence in increase of
value creative capacity of study case firms, by the way general results indicate that variables
CIV and ICE have influence on some financial ratio (beneficial ratios) of study case firms.
Researchers believe that measuring of intellectual capital with use of method CIV in practical
condition when sample volume of study case is very big don’t seem appropriate for this work
and efficiency of this method must distinguished in more experience researches because this
method is used led by the researchers, also results of present research indicate that in this
sample volume this method don’t have appropriate efficiency for measuring of intellectual
capital therefore seems it is necessary that more research is done for distinguishing efficiency
of model CIV for measuring of intellectual capital in firms surface until restraints and defects
of this method is distinguished more.

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