The Impact of Intellectual Capital Disclosure on Market Value: An Empirical Study on Jordanian Pharmaceutical Manufacturing Companies Listed in Amman Stock Exchange
DOI:
https://doi.org/10.25255/jss.2016.5.3.277.290Keywords:
Intellectual capital disclosure, market value, pharmaceutical companiesAbstract
The aim of this study was to explore the extent to which Jordanian pharmaceutical manufacturing companies disclose information on their intellectual capital components (human capital, structural capital, and relational capital), and its impact on companies’ market value, as measured by return on assets and rate of annual trading value. Content examination of annual reports was used to assess the extent of intellectual capital disclosure. The impact of disclosure was analyzed using regression analysis. All public shareholding pharmaceutical manufacturing companies listed in Amman Stock Exchange from 2007 to 2012, which comprised 6 companied, were included in the study. The results revealed that the disclosure of intellectual capital components have a significant impact on companies’ market value. Hence, pharmaceutical companies are required to pay more attention to extend their disclosure of intellectual capital elements, and to adopt new strategies that intensify investments in intangible assets.
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References
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Altuner, D., Çelik, S. & Güleç, T. (2015). The linkages among intellectual capital, corporate governance and corporate social responsibility. Corporate Governance, 15 (4), 491-507.
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Bontis, N. & Fitz-enz, J. (2002). Intellectual capital ROI: a casual map of human capital antecedents and consequences. Journal of Intellectual Capital, 3 (3), 223-247.
Bozbura, F. (2004). Measurement and application of intellectual capital in Turkey. The Learning Organization, 11 (4/5), 357-367.
Chahal, H. & Bakshi, P. (2015). Examining intellectual capital and competitive advantage relationship: role of innovation and organizational learning. International Journal of Bank Marketing, 33 (3), 376-399.
Chen, M., Cheng, S. & Hwang, Y. (2005). An empirical investigation of the relationship between intellectual capital and firms’ market value and financial performance. Journal of Intellectual Capital, 6 (2), 159-176.
Chen, Sh. (2009). Identifying and prioritizing critical intellectual capital for e-learning companies. European Business Review, 21 (5), 438-452.
Claver-Cortés, E., Zaragoza-Sáez, P., Molina-Manchón, H. & Úbeda-García, M. (2015). Intellectual capital in family firms: human capital identification and measurement. Journal of Intellectual Capital, 16 (1), 199-223.
Cricelli, L., Greco, M. & Grimaldi, M. (2014). An overall index of intellectual capital. Management Research Review, 37 (10), 880-901.
De Silva, T., Stratford, M. & Clark, M. (2013). Intellectual capital reporting: a longitudinal study of New Zealand companies. Journal of Intellectual Capital, 15 (1), 157-172.
Der Zahn, JL., Singh, I. & Heniro, J. (2007). Is there an association between intellectual capital disclosure, underpricing and long-run performance? Journal of Human Resource Costing & Accounting, 11 (3), 178-213.
Ferenhof, H., Durst, S., Bialecki, M. & Selig, P. (2015). Intellectual capital dimensions: state of the art in 2014. Journal of Intellectual Capital, 16 (1), 58-100.
Gannon, C., Lynch, P., & Harrington, D. (2008). Managing intellectual capital for sustained competitive advantage in the Irish tourism industry. Waterford Institute of Technology (WIT). Tourism and hospitality Research in Ireland Conference (THRIC), 16-17 June, DIT.
Goebel, V. (2015). Is the literature on content analysis of intellectual capital reporting heading towards a dead end? Journal of Intellectual Capital, 16 (3), 681-699.
Guthrie, J. (2001). Measurement and reporting of intellectual capital. Journal of Intellectual Capital, 2(1), p. 27-41.
Han, Y. & Li, D. (2015). Effects of intellectual capital on innovative performance: The role of knowledge-based dynamic capability. Management Decision, 53 (1), 40-56.
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Holland, J. (2003). Intellectual capital and the capital market – organization and competence. Accounting, Auditing & Accountability Journal, 16 (1), 39-48.
Hsu, L.C. and Wang, C.H. (2012). Clarifying the effect of intellectual capital on performance: the mediating role of dynamic capability, British Journal of Management, Vol. 23 No. 2, pp. 179-205.
Indra, Abeysekera. (2011). Civil War, Stock Return, and Intellectual Capital Disclosure in Sri Lanka. Advances in Accounting, incorporating Advances in International Accounting, 27 (2011), PP. 331–337
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Khalique, M., Bontis, N., Shaari, J. & Isa, A. (2015). Intellectual capital in small and medium enterprises in Pakistan. Journal of Intellectual Capital, 16 (1), 224-238.
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Liu, DY., Tseng, KA. & Yen, SW. (2009). The incremental impact of intellectual capital on value creation. Journal of Intellectual Capital, 10 (2), 260-276.
Massingham, P. & Tam, L. (2015). The relationship between human capital, value creation and employee reward. Journal of Intellectual Capital, 16 (2), 390-418.
Moghadam, S. Khayat, Zabihi, M. R., Kargaran, M. & Hakimzadeh, A. (2013). Intellectual capital and organizational learning capability. Journal of Soft Computing and Applications, 2013, 1-9.
Montgomery, D. C., Peck, E. A. & Vining, G. G. (2001). Introduction to linear regression analysis. (3rd ed.). UNA, New York: John Wiley & Sons.
Mouritsen, J. (2003). Overview: intellectual capital and the capital market- the circulability of intellectual capital. Accounting, Auditing & Accountability Journal, 16 (1), 18-30.
Mouritsen, J. (2009). Classification, measurement and the ontology of intellectual capital entities. Journal of Human Resource Costing & Accounting, 13 (2), 154-162.
Murthy, V. & Mouritsen, J. (2011). The performance of intellectual capital: Mobilising relationships between intellectual and financial capital in a bank. Accounting, Auditing &
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Ng, A. (2006). Reporting intellectual capital flow in technology-based companies: Case studies of Canadian wireless technology companies. Journal of Intellectual Capital, 7 (4), 492-510.
Nielsen, Christian & Madsen, Mona Toft (2009). Discourses of Transparency in the Intellectual Capital Reporting Debate: Moving From Generic Reporting Models to Management Defined Information. Critical Perspectives on Accounting, 20 (2009), PP. 847–854.
Nimtrakoon, S. (2015). The relationship between intellectual capital, firms’ market value and financial performance: Empirical evidence from the ASEAN. Journal of Intellectual Capital, 16 (3), 587-618.
Oliveras, E., Gowthorpe, C., Kasperskaya, C. & Perramon, J. (2008). Reporting intellectual capital in Spain. Corporate Communications: An International Journal, 13 (2), 168-181.
Orens, R., Aerts, W. & Lybaert, N. (2009). Intellectual capital disclosure, cost of finance and firm value. Management Decision, 47 (10), 1536-1554.
Phusavat, K., Comepa, N., Sitko-Lutek, A. and Ooi, K.B. (2011). Interrelationships between intellectual capital and performance: empirical examination. Industrial Management & Data Systems, 111 (6), 810-829.
Rodriguez-Ruiz, O. & Fernandez-Menendez, J. (2009). Intellectual capital revisited: A citation analysis of ten years of research in the area (1997-2007). Management Research: Journal of the Iberoamerican Academy of Management, 7 (3), 203-219.
Seleim, A. & Bontis, N. (2004). Intellectual capital in Egyptian software firms. The Learning Organization, 11 (4/5), 332-346.
Sharabati, A., Jawad, S. & Bontis, N. (2010). Intellectual capital and business performance in the pharmaceutical sector of Jordan. Management Decision, 48 (1), 105-131.
Taliyang, S. & Jusop, M. (2011). Intellectual capital disclosure and corporate governance structure: Evidence in Malaysia. International Journal of Business and Management, 6 (12), 109-117.
Tan, H., Plowman, D. & Hancock, P. (2007). Intellectual capital and financial returns of companies. Journal of Intellectual Capital, 8 (1), 76-95.
Tseng, KA., Lin , CI. & Yen, SW. (2015). Contingencies of intellectual capitals and financial capital on value creation: Moderation of business cycles. Journal of Intellectual Capital, 16 (1), 156-173.
Wang, J. (2008). Investigating market value and intellectual capital for S&P500. Journal of Intellectual Capital, 9 (4), 546-563.
Wang, W. Y. & Chang, C. (2005). Intellectual capital and performance in causal models: Evidence from the information technology industry in Taiwan. Journal of Intellectual Capital, 6 (2), 222-236.
Williams, R. (2015). Heteroskedasticity and weighted least squares. University of Notre Dame . Available online on, http://www3.nd.edu
Zeghal, D. & Maaloul, A (2010). Analyzing Value Added as an Indicator of Intellectual Capital and its Consequences on Company Performance. Journal of Intellectual Capital, 11(1), PP. 39–60.
Altuner, D., Çelik, S. & Güleç, T. (2015). The linkages among intellectual capital, corporate governance and corporate social responsibility. Corporate Governance, 15 (4), 491-507.
Anam, O., Fatima, A. & Majdi, A. (2011). Effects of intellectual capital information disclosed in annual reports on market capitalization Evidence from Bursa Malaysia. Journal of Human Resource Costing & Accounting, 15 (2), 85-101.
Beattie, Vivien & Thomson, Sarah Jane (2007). Lifting the lid on the use of content analysis to investigate intellectual capital disclosures. Accounting Forum, 31 (2007), 129–163.
Bontis, N. & Fitz-enz, J. (2002). Intellectual capital ROI: a casual map of human capital antecedents and consequences. Journal of Intellectual Capital, 3 (3), 223-247.
Bozbura, F. (2004). Measurement and application of intellectual capital in Turkey. The Learning Organization, 11 (4/5), 357-367.
Chahal, H. & Bakshi, P. (2015). Examining intellectual capital and competitive advantage relationship: role of innovation and organizational learning. International Journal of Bank Marketing, 33 (3), 376-399.
Chen, M., Cheng, S. & Hwang, Y. (2005). An empirical investigation of the relationship between intellectual capital and firms’ market value and financial performance. Journal of Intellectual Capital, 6 (2), 159-176.
Chen, Sh. (2009). Identifying and prioritizing critical intellectual capital for e-learning companies. European Business Review, 21 (5), 438-452.
Claver-Cortés, E., Zaragoza-Sáez, P., Molina-Manchón, H. & Úbeda-García, M. (2015). Intellectual capital in family firms: human capital identification and measurement. Journal of Intellectual Capital, 16 (1), 199-223.
Cricelli, L., Greco, M. & Grimaldi, M. (2014). An overall index of intellectual capital. Management Research Review, 37 (10), 880-901.
De Silva, T., Stratford, M. & Clark, M. (2013). Intellectual capital reporting: a longitudinal study of New Zealand companies. Journal of Intellectual Capital, 15 (1), 157-172.
Der Zahn, JL., Singh, I. & Heniro, J. (2007). Is there an association between intellectual capital disclosure, underpricing and long-run performance? Journal of Human Resource Costing & Accounting, 11 (3), 178-213.
Ferenhof, H., Durst, S., Bialecki, M. & Selig, P. (2015). Intellectual capital dimensions: state of the art in 2014. Journal of Intellectual Capital, 16 (1), 58-100.
Gannon, C., Lynch, P., & Harrington, D. (2008). Managing intellectual capital for sustained competitive advantage in the Irish tourism industry. Waterford Institute of Technology (WIT). Tourism and hospitality Research in Ireland Conference (THRIC), 16-17 June, DIT.
Goebel, V. (2015). Is the literature on content analysis of intellectual capital reporting heading towards a dead end? Journal of Intellectual Capital, 16 (3), 681-699.
Guthrie, J. (2001). Measurement and reporting of intellectual capital. Journal of Intellectual Capital, 2(1), p. 27-41.
Han, Y. & Li, D. (2015). Effects of intellectual capital on innovative performance: The role of knowledge-based dynamic capability. Management Decision, 53 (1), 40-56.
Harrison, S. & Sulliva Sr, P. (2000). Profiting from intellectual capital: Learning from leading companies. Journal of Intellectual Capital, 1(1), p. 33-46.
Holland, J. (2003). Intellectual capital and the capital market – organization and competence. Accounting, Auditing & Accountability Journal, 16 (1), 39-48.
Hsu, L.C. and Wang, C.H. (2012). Clarifying the effect of intellectual capital on performance: the mediating role of dynamic capability, British Journal of Management, Vol. 23 No. 2, pp. 179-205.
Indra, Abeysekera. (2011). Civil War, Stock Return, and Intellectual Capital Disclosure in Sri Lanka. Advances in Accounting, incorporating Advances in International Accounting, 27 (2011), PP. 331–337
Jing Li, Musa Mangena, Richard Pike. (2012). The effect of audit Committee characteristics on intellectual capital disclosure. The British Accounting Review, 44 (2012), pp. 98–110
Kamukama, N. (2013). Intellectual capital: company’s invisible source of competitive advantage. Competitiveness Review: An International Business Journal, 23 (3), 260-283.
Khalique, M., Bontis, N., Shaari, J. & Isa, A. (2015). Intellectual capital in small and medium enterprises in Pakistan. Journal of Intellectual Capital, 16 (1), 224-238.
Kianto, A., Hurmelinna-Laukkanen, P. & Ritala, P. (2010). Intellectual capital in service- and product-oriented companies. Journal of Intellectual Capital, 11 (3), 305-325.
Ling, YH. (2012). The influence of intellectual capital on global initiatives. The journal of information and knowledge management systems, 42 (1), 129-144.
Liu, DY., Tseng, KA. & Yen, SW. (2009). The incremental impact of intellectual capital on value creation. Journal of Intellectual Capital, 10 (2), 260-276.
Massingham, P. & Tam, L. (2015). The relationship between human capital, value creation and employee reward. Journal of Intellectual Capital, 16 (2), 390-418.
Moghadam, S. Khayat, Zabihi, M. R., Kargaran, M. & Hakimzadeh, A. (2013). Intellectual capital and organizational learning capability. Journal of Soft Computing and Applications, 2013, 1-9.
Montgomery, D. C., Peck, E. A. & Vining, G. G. (2001). Introduction to linear regression analysis. (3rd ed.). UNA, New York: John Wiley & Sons.
Mouritsen, J. (2003). Overview: intellectual capital and the capital market- the circulability of intellectual capital. Accounting, Auditing & Accountability Journal, 16 (1), 18-30.
Mouritsen, J. (2009). Classification, measurement and the ontology of intellectual capital entities. Journal of Human Resource Costing & Accounting, 13 (2), 154-162.
Murthy, V. & Mouritsen, J. (2011). The performance of intellectual capital: Mobilising relationships between intellectual and financial capital in a bank. Accounting, Auditing &
Neysi, S., Mazraeh, S. & Mousavi, Z. (2012). The Importance of Intellectual Capital Disclosure. International Journal of Business and Social Science, 3 (15), 307-310.
Ng, A. (2006). Reporting intellectual capital flow in technology-based companies: Case studies of Canadian wireless technology companies. Journal of Intellectual Capital, 7 (4), 492-510.
Nielsen, Christian & Madsen, Mona Toft (2009). Discourses of Transparency in the Intellectual Capital Reporting Debate: Moving From Generic Reporting Models to Management Defined Information. Critical Perspectives on Accounting, 20 (2009), PP. 847–854.
Nimtrakoon, S. (2015). The relationship between intellectual capital, firms’ market value and financial performance: Empirical evidence from the ASEAN. Journal of Intellectual Capital, 16 (3), 587-618.
Oliveras, E., Gowthorpe, C., Kasperskaya, C. & Perramon, J. (2008). Reporting intellectual capital in Spain. Corporate Communications: An International Journal, 13 (2), 168-181.
Orens, R., Aerts, W. & Lybaert, N. (2009). Intellectual capital disclosure, cost of finance and firm value. Management Decision, 47 (10), 1536-1554.
Phusavat, K., Comepa, N., Sitko-Lutek, A. and Ooi, K.B. (2011). Interrelationships between intellectual capital and performance: empirical examination. Industrial Management & Data Systems, 111 (6), 810-829.
Rodriguez-Ruiz, O. & Fernandez-Menendez, J. (2009). Intellectual capital revisited: A citation analysis of ten years of research in the area (1997-2007). Management Research: Journal of the Iberoamerican Academy of Management, 7 (3), 203-219.
Seleim, A. & Bontis, N. (2004). Intellectual capital in Egyptian software firms. The Learning Organization, 11 (4/5), 332-346.
Sharabati, A., Jawad, S. & Bontis, N. (2010). Intellectual capital and business performance in the pharmaceutical sector of Jordan. Management Decision, 48 (1), 105-131.
Taliyang, S. & Jusop, M. (2011). Intellectual capital disclosure and corporate governance structure: Evidence in Malaysia. International Journal of Business and Management, 6 (12), 109-117.
Tan, H., Plowman, D. & Hancock, P. (2007). Intellectual capital and financial returns of companies. Journal of Intellectual Capital, 8 (1), 76-95.
Tseng, KA., Lin , CI. & Yen, SW. (2015). Contingencies of intellectual capitals and financial capital on value creation: Moderation of business cycles. Journal of Intellectual Capital, 16 (1), 156-173.
Wang, J. (2008). Investigating market value and intellectual capital for S&P500. Journal of Intellectual Capital, 9 (4), 546-563.
Wang, W. Y. & Chang, C. (2005). Intellectual capital and performance in causal models: Evidence from the information technology industry in Taiwan. Journal of Intellectual Capital, 6 (2), 222-236.
Williams, R. (2015). Heteroskedasticity and weighted least squares. University of Notre Dame . Available online on, http://www3.nd.edu
Zeghal, D. & Maaloul, A (2010). Analyzing Value Added as an Indicator of Intellectual Capital and its Consequences on Company Performance. Journal of Intellectual Capital, 11(1), PP. 39–60.
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Published
2016-07-01
How to Cite
Altal, A. F. (2016). The Impact of Intellectual Capital Disclosure on Market Value: An Empirical Study on Jordanian Pharmaceutical Manufacturing Companies Listed in Amman Stock Exchange. Journal of Social Sciences (COES&Amp;RJ-JSS), 5(3), 277–290. https://doi.org/10.25255/jss.2016.5.3.277.290
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