Intellectual Capital and Firms’ Financial Performance: Empirical Evidence from Pakistan Stock Exchange

Abstract

This paper intends to investigate the relationship between intellectual capital and firms’ financial performance in the emerging market of Pakistan. This study employs unbalanced panel data of 152 non-financial publicly firms listed at the Pakistan Stock Exchange for the period of seven years (2012-2018). The VAIC model initiated by Pulic (1998) is incorporated for measuring and computing intellectual capital. The pooled OLS results revealed that VAIC is highly significant and positively related to FFP; furthermore, the individual constituents of VAIC such as HCE, SCE, and CEE also have a significant and positive association with FFP in terms of all the performance measures.