Intellectual capital and value: testing new IC measures in Russia

Danila Ovechkin, Natalia Boldyreva and Vladimir Davydenko

Journal of Economic Studies, 2020, vol. 48, issue 6, 1111-1127

Abstract: Purpose - The aim of this paper is to propose extended intellectual capital (IC) indicators. The study shows that the essence of IC in the context of value is residual income, its growth rate and growth rate of equity taken together. It allows creating IC measures (modified residual income and economic value added of equity) that contain these components. The study investigates the relationship between IC and market value for Russian public firms. Design/methodology/approach - The authors propose modified residual income and modified economic value added of equity as IC metrics. This study tests a relationship between market value and IC to investigate suggested metrics. Static and dynamic panel data models are used. 25 companies from the MOEX Russia Index were included in the study. The study covers the period from 2014 to 2018. Findings - The findings show a strong positive relationship between market value and IC. The results confirm that extended IC measures have a stronger connection to market value. Practical implications - Firstly, these results benefit managers. They can use proposed extended IC measures as targets for the company when planning business strategy and generating business environment. Secondly, suggested IC measures can help shareholders and investors achieve their long-term goal – wealth maximization. Originality/value - The value of this article is the development of IC theory and valuation. The proposed measures differ in the way that they consider the growth rates – the main determinants of value along with efficiency.

Keywords: Intellectual capital; Intangible assets; Value of firm; Methods of intellectual capital valuation; Corporate finance; G32; O16; O34 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jespps:jes-05-2020-0226

DOI: 10.1108/JES-05-2020-0226

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