Impact of Intellectual Capital on Financial Performance: Evidence from Manufacturing Companies in Bangladesh
Md. Nazrul Islam
Department of Accounting and Information Systems
Jatiya Kabi Kazi Nazrul Islam University
Trishal, Mymensingh, Bangladesh.
Md. Maniruzzaman
Department of Accounting and Information Systems
University of Rajshahi, Rajshahi, Bangladesh
Syed Zabid Hossain
Department of Accounting and Information Systems,
University of Rajshahi, Rajshahi, Bangladesh
DOI: https://doi.org/10.63817/jmagp.10.2024.017
Received November 3, 2024
Revised January 24, 2025
Accepted March 5, 2025
Abstract
Purpose- This research aims to appraise how intellectual capital (IC) affects the financialperformance of Dhaka Stock Exchange (DSE) listed manufacturing companies in Bangladesh.
Methodology- The study chose 92 firms listed on the DSE of Bangladesh based on a convenience sample approach from 2017-2022, resulting in 552 firm-year observations. The study employed a fixed-effect model built around the Hausman test to test the hypothesis.
Finally, this study also employed a robustness check against non-normality, which is appropriate for this study.
Findings- The study shows that IC can enhance company performance in Bangladesh’s manufacturing sector. More specifically, research outcomes indicate that HCE and CEE meaningfully and positively impact accounting performance (ROA and ROE). HCE has substantial
adverse effects, and SCE has a substantial affirmative impact on market performance (TQ).
Implications- Policymakers, business executives, finance managers, and other stakeholders can benefit from these findings in several ways. They can better understand the need to invest more in IC components, critically assess IC, and better manage intangible assets, which will
boost the performance of Bangladeshi manufacturing companies and aid in creating new business plans.
Novelty/originality- This study adds a noteworthy contribution to the current literature by applying the VAIC model for the first time to assess the link between IC and both accounting performance (ROA, ROE) market performance (Tobin’s Q) of DSE-listed manufacturing firms.
Keywords: Intellectual capital, Return on assets, Return on equity, Tobin’s Q, Manufacturing, Bangladesh
Paper type: Research paper