Human Capital Efficiency and Financial Performance: Empirical Evidence of Malaysian Public Companies

Azlina Rahim*, Amrizah Kamaluddin and Ruhaya Atan
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Azlina Rahim*: Faculty of Accountancy, Universiti Teknologi MARA, Melaka, Malaysia
Amrizah Kamaluddin: Faculty of Accountancy, Universiti Teknologi MARA, Shah Alam, Malaysia
Ruhaya Atan: Accountancy Research Institute, Universiti Teknologi MARA, Shah Alam, Malaysia

The Journal of Social Sciences Research, 2018, 878-884 Special Issue: 5

Abstract: The purpose of this study is to investigate empirically the relationship between human capital efficiency and financial performance of Malaysian public companies. Using accounting data, this study reviewed the annual reports of Malaysian companies for a period of thirteen years from 2000 to 2012. The study applied Value Added Intellectual Coefficient (VAICTM) methodology developed by Ante Pulic to determine the human capital efficiency of a company. The regression models was construct to examine the relationship between human capital efficiency and financial performance measures including return on assets (ROA) and return on equity (ROE).The results revealed that human capital efficiency has significant and positive relationships with financial performance. The human capital efficiency is seen as a value driver for a company’s competitiveness. Hence, the findings of this study should help companies’ managers to make better decision pertaining to investment of their strategic asset that is human capital.

Keywords: Human capital efficiency; Performance; VAICTM; Malaysia (search for similar items in EconPapers)
Date: 2018
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