Does Intellectual Capital Affect Financial Leverage of Chinese Agricultural Companies? Exploring the Role of Firm Profitability

Guangchun Jin and Jian Xu
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Guangchun Jin: Department of Economics and Management, Qingdao Agricultural University, Qingdao 266109, China
Jian Xu: Department of Economics and Management, Qingdao Agricultural University, Qingdao 266109, China

Sustainability, 2022, vol. 14, issue 5, 1-14

Abstract: The objective of this paper is to examine the relationship between intellectual capital (IC) and firms’ financial leverage by exploring whether firm profitability mediates this relationship, using a dataset of Chinese agricultural listed companies during the period of 2014–2020. Financial leverage is measured by the debt-to-asset ratio, and IC is measured via the modified value-added intellectual coefficient (MVAIC) model. The results reveal that financial leverage is lower in firms with higher levels of IC, and IC positively affects firm profitability. In addition, firm profitability partially mediates the relationship between IC and financial leverage. When MVAIC is disaggregated into its four components, firm profitability has a partially mediating effect on the relationship between physical and human capitals and financial leverage. This paper might provide corporate managers with a clear understanding of IC’s impact on firm indebtedness.

Keywords: intellectual capital; financial leverage; firm profitability; agricultural listed companies; mediating effect (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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