THE DIFFERENT PROPORTION OF IC COMPONENTS AND FIRMS’ MARKET PERFORMANCE: EVIDENCE FROM TAIWAN

William S. Chang

The International Journal of Business and Finance Research, 2010, vol. 4, issue 4, 121-134

Abstract: The study adjusts Pulic’s (2000) intellectual capital approach, “Value Added Intellectual Coefficient (VAICTM), to measure firms’ value creation and market performance. The research here adds two new intellectual capital components, Research and Development (R&D) expenditure and intellectual property, into Pulic's approach. Data were collected from 2005-2007 annual reports of companies listed on the Taiwan Stock Exchange Corporation (TSEC) and Market Observation Post System (MOPS). The results support the hypothesis that firms’ intellectual capital has a positive impact on market performance and its profitability in a modified VAIC method. The author finds that R&D expenditure and intellectual property (TCE) capture additional information about value creation. Furthermore, firms with a different intellectual capital contribution create a different market performance. Thus, in the knowledge-based economy, not only should the value of intellectual capital (IC) be considered, but also the allocation of IC. Finally, both information technology (IT)- and Non-IT corporations must value and manage their intellectual capital, particularly R&D and intellectual property, in order to create long-term competitiveness and create a higher market return.

Keywords: Intellectual capital; R&D expenditure; intellectual property; VAICTM (search for similar items in EconPapers)
JEL-codes: G30 (search for similar items in EconPapers)
Date: 2010
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