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The Effect of Intellectual Capital on Cost of Finance and Firm Value

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  • Mohsen Iranmahd
  • Mahmoud Moeinaddin
  • Nasim Shahmoradi
  • Forough Heyrani

Abstract

In today's knowledge-based industry, the role of intellectual capitals in creating value for the business units is more effective than financial capitals. The accounting system plays a crucial role in finding appropriate strategies for achieving suitable methods of evaluating intellectual capitals. One of the most significant shortcomings of traditional accounting systems is that it doesn't reflect the intellectual capital value in financial reports of business units. Collecting the data from 84 firms, this study examines the relationship between intellectual capital and financing costs, and the value of manufacturing companies listed in Tehran Stock Exchange for an eight-year period. In order to measure intellectual capital, the value-added of intellectual capital coefficient, value-added of intellectual capital and value added of capital applied were used the calculation of which were performed through Palic's method which is one of the most practical methods of calculating intellectual capital. In order to analyze the data, Pearson correlation, univariate and multivariate regressions, and Z Wang test were also performed. Results showed that the value added of capital applied, value added of intellectual capital, and the value added of intellectual capital coefficient negatively influenced weighted average cost of capital, yet they had no effect on enterprise value.

Suggested Citation

  • Mohsen Iranmahd & Mahmoud Moeinaddin & Nasim Shahmoradi & Forough Heyrani, 2014. "The Effect of Intellectual Capital on Cost of Finance and Firm Value," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 4(2), pages 1-8, April.
    • Handle: RePEc:hur:ijaraf:v:4:y:2014:i:2:p:1-8
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    References listed on IDEAS

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    1. Nick Bontis & Mary M. Crossan & John Hulland, 2002. "Managing An Organizational Learning System By Aligning Stocks and Flows," Journal of Management Studies, Wiley Blackwell, vol. 39(4), pages 437-469, June.
    2. Bontis, Nick & Dragonetti, Nicola C. & Jacobsen, Kristine & Roos, Göran, 1999. "The knowledge toolbox:: A review of the tools available to measure and manage intangible resources," European Management Journal, Elsevier, vol. 17(4), pages 391-402, August.
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    Cited by:

    1. Завалій, Тетяна Олександрівна, 2018. "Полісемантичний характер поняття клієнтського капіталу підприємства // Polysemic Nature of the Notion of Customer Capital of the Enterprise," Проблеми теорії та методології бухгалтерського обліку, контролю і аналізу // Problems of Theory and Methodology of Accounting, Control and Analysis, Житомирський державний технологічний університет // Zhytomyr State Technological University, vol. 39(1).
    2. Bima Cinintya Pratama, 2016. "The Impact of Intellectual Capital of Indonesian's High-Tech Company on Firm’s Financial and Market Performance," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 6(4), pages 73-81, October.

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