This article presents a review of the book “Organizations: Rational, Natural and Open Systems,” by W.R. Scott.

Organizations: Rational, Natural and Open Systems

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Intellectual Capital The New Wealth Of Organizations

The maturity structure of corporate debt

Purpose
This study aims to investigate the intellectual capital–financial performance relationship using two models, namely the conventional Value-Added Intellectual Coefficient (VAIC) model and the adjusted Value-Added Intellectual Coefficient (A-VAIC) model

Design/methodology/approach
This study is designed as a quantitative research focusing on the relationship between intellectual capital and financial performance of the banking industry in Indonesia As many as 114 data are derived from the publicly listed banks on the Indonesia Stock Exchange for the period of 2012–2017 The multiple regression analysis is employed to test the hypotheses studied

Findings
In general, the result confirms that intellectual capital affects financial performance Although not all hypotheses of the study are supported by either the VAIC model or the A-VAIC model, the results provide a deeper and new insight on how each component of intellectual capital efficiency (human capital, structural capital, capital employed, innovation capital) relates to financial performance (return on asset, return on equity, asset turnover, price to book ratio) The results also justify that further improvements in measuring intellectual capital are still needed in the future

Research limitations/implications
This study limits its generalization since the sample is only in the Indonesian banking industry Notwithstanding the limitation, the results imply that the Indonesian banking managers need to be aware of intellectual capital management because of its strategic role in enhancing financial performance

Practical implications
This study contributes to the intellectual capital literature by providing empirical evidence on the use of both models, namely the conventional VAIC and the A-VAIC in the Indonesian banking industry research setting which is never been studied before

Social implications
This study has the social implication to the enhancement of the quality life of the society The higher the quality of intellectual capital in the banking firms, the better the banks serve the needs of the community

Originality/value
This study contributes to the IC literature by providing empirical research on the use of the VAIC model and the A-VAIC model in the Indonesian banking industry

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Measures that matter: an empirical investigation of intellectual capital and financial performance of banking firms in Indonesia

The accumulation of intangible assets in the form of intellectual capital (IC) has been recognized to be significant for a firm’s competitiveness. The strategic significance of knowledge fo...

Intellectual Capital, Innovation, and Performance in Construction Contracting Firms

The aim of this study is to examine the impact of intellectual capital on financial performance of Malaysian construction firms using value-added intellectual coefficient (VAIC) model. The empirical data were drawn from a panel consisting of 41 construction firms listed in Bursa Malaysia and observed over a five-year period of 2011 to 2015. Two regression models were examined in order to test the hypotheses included in the research framework of the study. Intellectual capital is the independent variable in the study and measured by VAIC, HCE, SCE, CEE and the dependent variable, financial performance, is proxy by ROA. The results show that VAIC is positive and significantly associated with ROA. However, on the components of intellectual capital, only CEE is positive and significantly associated with ROA. The concentration on one industry and the relatively narrow five-year period for data collection were the main limitations of this study. The value of this study is the contribution towards intellectual capital literature by expanding into construction firms and such a research is limited.

https://kwpublications.com/papers_submitted/4093/the-impact-of-intellectual-capital-on-financial-performance-of-malaysian-construction-firms.pdf

The Impact of Intellectual Capital on Financial Performance of Malaysian Construction Firms

This study investigated the impact of capital structure on financial performance of Malaysian construction firms. The empirical data was taken from 41 construction firms listedon the main board of Bursa Malaysia and observed from 2011 to 2015. Capital structure is the financing decision on the proportion between debt and equity. The right proportion leads to optimal capital structure. This study adopts two theories namely trade-off theory and pecking order theory, to explain the concept of optimal capital structure. Capital structure is the independent variable and is measured by short-term debt (STD), long-term debt (LTD), total debt (TD), meanwhile the dependent variable, financial performance, is proxy by return on asset (ROA) and return on equity (ROE). The results indicated positive and significant association between LTD and ROE. However, STD was significant but negatively correlated with ROE. Meanwhile, TD was positive but insignificantly associated with ROE. Nevertheless, STD, LTD and TD were negatively and insignificantly associated with ROA. The findings suggested that financing decisions are influenced by the objective of the firms. If the goal of the firms was to maximize return on asset, the pecking order theory was employed, however if the firms’ objective was to maximize return on equity then the trade-off theory was appropriate to explain the concept of optimal capital structure. The concentration on one industry and the relatively narrow five-year period for data collection were the main limitations of this study. The findings of the research will contribute towards capital structure literature.

https://archive.aessweb.com/index.php/5002/article/download/1888/2915

Capital Structure and Financial Performance of Malaysian Construction Firms

This study examined the influence of intellectual capital on Malaysian financial firms from two perspectives, performance of intellectual capital and impact of intellectual capital on financial performance. The data used were collected from the audited annual reports of 21 financial firms listed in the finance sector of Bursa Malaysia. The sample period was from 2011 to 2015 and the number of observations for this analysis was 105. Intellectual capital was measured using the modified value-added intellectual coefficient (MVAIC) model and financial performance was proxied by the return on asset (ROA). The findings suggested a strong association between MVAIC and ROA. CEE, HCE and SCE made significant and positive contributions towards financial performance. As for RCE, the findings revealed a positive but insignificant relationship with ROA. On the performance of intellectual capital, the HCE contributed approximately 82% to MVAIC followed by SCE 16%, RCE 1% and CEE 1%. Thus, the value creation capability of Malaysian financial firms is directly attributable to the HCE of the firms. The main limitations of the study were no control for firm-specific variables such as firm-size, and that the level of risk, firms’ complexity and structural capital were not segregated into its components namely innovation capital and process capital to identify which was more dominant in creating value. Financial firms may use the results to address the factors affecting intellectual capital performance in order to maximize value creation capability. Education institutions need to collaborate with the finance industry to increase the relevance of their educational mission and to stimulate new directions in the education industry.

https://archive.aessweb.com/index.php/5002/article/download/1835/2819

Performance of Malaysian Financial Firms: An Intellectual Capital Perspective Using MVAIC Model

The aim of this study is to examine the influence of firm size on the relationship between intellectual capital, capital structure and financial performance of Malaysian construction firms. The empirical data were taken from 41 construction firms listed in the main board of Bursa Malaysia and observed over the five-year period of 2011 to 2015. This study is deemed necessary as the findings of prior studies on the relationship between intellectual capital, capital structure and financial performance, had documented mixed and inconclusive result, thus, the inclusion of firm size as a moderating variable may modify (strengthen or weaken) the above relationships. Intellectual capital, capital structure, financial performance and firm size are proxy by VAIC Model, total debt ratio, return on equity and log of total asset, respectively. The result shows a positive moderator effect of firm size on the relationship between intellectual capital and financial performance in construction. The findings suggests that firms’ value creation capability increases with firms’ size, thus larger firms’ are in a better position to generate profit. The concentration on one industry and the relatively narrow five-year period for data collection are the main limitations of this study. The findings of the research will contribute towards the literature.

https://hrmars.com/papers_submitted/5676/Firms_Size_as_a_Contingency_Approach_in_the_Relationships_of_Intellectual_Capital,_Capital_Structure_and_Financial_Performance.pdf

Firms’ Size as a Contingency Approach in the Relationships of Intellectual Capital, Capital Structure and Financial Performance

The purpose of this paper is to review the literature on the relationship between Shari’ah Supervisory Board (SSB) and Zakat disclosure in the financial statement of Islamic banks in Malaysia. It is based on the hypothesis that SSB relates positively to Zakat disclosure.The design of the paper is based on stakeholder theory and
agency theory.Both of the theories discussed the need on the part of Islamic banks as the agent to stakeholders to provide sufficient information about the operation of the banks.The information which is communicated through the financial statements will assist the stakeholders in their decision making processes. Discussion in this paper attempts to shed lights on the importance of SSB in enhancing disclosure on Zakat.For SSB to be able to do that, we review literature on the education background of members (Islamic and non-Islamic) and size (number of members) of SSB. This paper is a conceptual paper with the aim of contributing towards a better understanding of the local reporting framework for Zakat and the paper also attempts to clarify that the Zakat structure in Malaysia is unique therefore foreign standard may not be appropriate for local adoption.

Hapsah S. Mohammad

Papers

The Impact of Intellectual Capital on Financial Performance of Malaysian Construction Firms

Capital Structure and Financial Performance of Malaysian Construction Firms

Performance of Malaysian Financial Firms: An Intellectual Capital Perspective Using MVAIC Model

Firms’ Size as a Contingency Approach in the Relationships of Intellectual Capital, Capital Structure and Financial Performance

The relationship between Shari’ah Supervisory Boardand Zakat disclosure among Islamic banks in Malaysia