Academic journal article Asian Social Science

Intellectual Capital, Firm Value and Ownership Structure as Moderating Variable: Empirical Study on Banking Listed in Indonesia Stock Exchange Period 2009-2012

Academic journal article Asian Social Science

Intellectual Capital, Firm Value and Ownership Structure as Moderating Variable: Empirical Study on Banking Listed in Indonesia Stock Exchange Period 2009-2012

Article excerpt

Abstract

Intellectual capital has been known since the issue of the failure of traditional accounting reporting real asset values and the presence of an integrated reporting standard requiring disclosure on capital employed in the creation of corporate value. This study aims to determine the effect of intellectual capital on firm value by ownership structure as a moderating variable. Intellectual capital is measured by using a model of Value Added Intellectual Coefficient (VAICTM) while the value of the company is measured by using Tobin's Q. The ownership structure as a moderating variable is represented by the percentage of managerial ownership and institutional ownership.

This study's population is banking companies listed in Indonesia Stock Exchange (BEI) from 2009 to 2012. Based on purposive sampling method, the sample is obtained by 27 companies. The analytical method used is multiple regression equation for overall and path analysis for testing residual moderating variables.

The results of this study indicate that intellectual capital has a positive and significant effect on firm value. This study also proves that managerial ownership is moderating variable that negatively affect the relationship of intellectual capital on firm value. While institutional ownership does not moderate the effect of intellectual capital on firm value.

Keywords: intellectual capital, VAICTM, firm value, managerial ownership, institutional ownership

I. Introduction

1.1 Background

Developments in science and technology is growing rapidly in this era of globalization has intensified competition in the business world. Thus, to maintain the existence of the business world, companies must quickly change its strategy based on labor (labor-based business) to businesses based on knowledge, the main characteristics of science (Kuryanto & Muchamad, 2008). Companies that implement this knowledge based businesses tend to create value based on intangible assets (intangible assets) and intangible resources rather than assets (Chen et al., 2005). Companies are increasingly emphasizing the importance of knowledge assets (knowledge assets) as a form of intangible assets (Thaib, 2013). This is because business people begin to realize the ability to compete not only in the ownership of tangible assets, but rather the innovation, information systems, organizational management and its organizational resources (Solikhah, 2010). In the asset management based on knowledge, such as the conventional capital natural resources, financial resources and physical assets can be utilized more efficiently and economically so as to create a competitive advantage for the company (Sawarjuwono & Augustine, 2003). The development of an asset management system based on this knowledge affect the company's financial reporting. According Widyaningdyah (2008), traditional accounting has been used 500 years as the basis for the current financial report fails to adapt to the change in the economy, especially in knowledge-asset reporting requirements. This is because the financial statements are not able to present the relevant information regarding the amount of the value of the intangible asset so that it can influence corporate policy. Failure to report knowledge of traditional accounting assets can be seen from the phenomenon that occurs in some large companies such as knowledge-based Microsoft, Coca Cola and Intel, which are not carrying an intangible asset on the balance sheet of these companies so that there is a very significant difference in value between the book value assets with a market value of these companies (Sawarjuwono & Augustine, 2003). The existence of a significant difference in value can be concluded that the financial statements are failing to reflect the true value of the company so it cannot be used in decision making (Kuryanto & Muchamad, 2008).

Limitations of financial statements in explaining the value of the company pointed to the fact that the source of economic value is no longer in the form of raw material production, but the creation of intellectual capital (Ulum, 2008). …

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