Analysis of Intellectual Capital and Financial Performance of Textile and Garment Industries in Indonesia

Ratu Shavira, Niki Lukviarman and Erna Setiany

A chapter in The Finance-Innovation Nexus: Implications for Socio-Economic Development, 2024, vol. 34, pp 121-131 from Emerald Group Publishing Limited

Abstract: This study investigates the influence of intellectual capital on the financial performance of textile and garment companies in Indonesia. In this study, three proxied of value-added intellectual capital are used to represent intellectual capital: value-added human capital (VAHU), value-added structural capital, and value-added capital employed (VACA). The sample consists of 72 firm years of textile and garment companies publicly traded on the Indonesian Stock Exchange between 2016 and 2019 and was chosen using a purposive sampling method that fit the study’s requirements utilising panel data analysis. In this study, multiple regression analysis was used to test the hypothesis. According to the study, not all proxies of intellectual capital have an impact on a company’s financial performance. Return on assets (ROA) is influenced by VAHU, while asset turnover and ROA are only affected by VACA. Structural capital value-added has no impact on any financial performance measurements. In this analysis, physical capital was the most important element impacting financial performance. Since intellectual capital has a significant impact on financial success as measured by profitability ROA, it has a considerable relationship with ROA.

Keywords: Intellectual capital; financial performance; value-added human capital; structural capital value-added; value-added capital employed; O11; Q01; Q5 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eme:isetez:s1571-038620240000034009

DOI: 10.1108/S1571-038620240000034009

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