Unraveling the Dynamics of Intellectual Capital, Firm Performance, and the Influential Moderators—BIG4 Auditors and Group Affiliation

Swati Mohapatra () and Jamini Kanta Pattanayak
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Swati Mohapatra: Department of Management Studies and Industrial Engineering, Indian Institute of Technology (Indian School of Mines), Dhanbad 826004, Jharkhand, India
Jamini Kanta Pattanayak: Department of Management Studies and Industrial Engineering, Indian Institute of Technology (Indian School of Mines), Dhanbad 826004, Jharkhand, India

IJFS, 2024, vol. 12, issue 1, 1-29

Abstract: The importance of intellectual capital (IC) in past decades unfolds several dimensions of firm performance (FP). Still, the contradictory and inconclusive relationship between IC and FP in the literature motivates the researchers to explore further and understand the empirical connection using both linear and curvilinear approaches. Using the fixed-effect panel regression models on a sample of 795 non-financial firms of India from the financial years 2004–2005 to 2020–2021, this study reveals that, undoubtedly, the IC enhances the FP up to a certain threshold, and with any marginal investment, IC reduces the FP by forming the inverted U-shaped curve. Interestingly, the presence of BIG4 auditors in Indian firms helps to increase the FP with the help of IC, even for the group-affiliated firms. Thus, this study aligns with both value creation and cost concern perspectives and implies that management and regulatory bodies may adopt a balanced approach while enhancing the FP through IC, as the result suggests that investment in IC will not endlessly improve the FP in the Indian context.

Keywords: intellectual capital; firm performance; BIG4 auditors; group affiliation; moderated moderation (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2024
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