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Intellectual capital and financial performance: An evaluation of the Australian financial sector
journal contributionposted on 2018-09-13, 00:00 authored by M Joshi, D Cahill, J Sidhu, Monika KansalMonika Kansal
Purpose: The purpose of this paper is to examine the intellectual capital (IC) performance of the Australian Financial Sector for the period 2006-2008. It also aims to examine the relationship amongst various constituents of IC performance and the relationship between IC performance and the financial performance of the financial sector. Design/methodology/approach: The value added intellectual coefficient (VAICe) approach developed by Pulic is used to determine the IC performance of the Australian financial sector. The required data to calculate different constituents of IC were obtained from the annual reports of Australian banks. Findings: The paper reveals that VAIC has a significant relation with human costs and the value addition made by the Australian banks. All Australian-owned banks have relatively higher human capital efficiency than capital employed efficiency and structural capital efficiency. The size of the bank in terms of total assets, total number of employees and total shareholders' equity has little or no impact on the IC performance of the Australian-owned banks. Research limitations/implications: The paper analyses IC performance of only 11 Australian-owned banks. However, the more than 90 per cent market share enjoyed by these banks still promises a degree of validation of the results of the paper from the Australian perspective or similar banking structure in some countries. Practical implications: The findings may serve as a useful input for financial institutions to apply knowledge management in their institutions and in addressing the factors affecting IC performance in order to maximise their value creation. The findings of the study would also provide some information to the stakeholders and potential investors to assess the value creation capabilities of financial sector companies. Originality/value: This is the first paper that examines the relationship of VAICe and the size of the firms for Australian-owned banks in Australia. © Emerald Group Publishing Limited.