Impact of Intellectual Capital on Financial Performance: The Mediating Role of Financial Leverage

Muhammad Rizwan Kamran, Fazal Rasool, Aisha Saleem and Muhammad Jawad Malik

Sustainable Business and Society in Emerging Economies, 2023, vol. 5, issue 3, 401-410

Abstract: Purpose: The purpose of the study is to examine the effect of intellectual capital (IC) on the financial performance through the mediating role of financial leverage. The data set of PSX 100 index is used from 2015 to 2022 of Pakistani firms. Design/Methodology/Approach: This study employs panel data and uses annual reports to collect the relevant data. Regression analysis and Stata is used for analysis.Findings: The outcomes of the study express that there is a significant and positive linkage between intellectual capital and the financial performance. Intellectual capital effects the financial performance both directly and indirectly with the mediating effect of the financial leverage. Due to the financial leverage mediation effect the organization need to have an optimal leverage to enhance the profitability and performance of the organization.Implications/Originality/Value: Theoretical and managerial implications has been discussed.

Keywords: Financial leverage; Financial performance; Indirect effects; Intellectual capital (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:src:sbseec:v:5:y:2023:i:3:p:401-410

DOI: 10.26710/sbsee.v5i3.2823

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