Abstract
Development of a knowledge economy has changed the main value of a firm from traditional physical assets to intellectual capital or intangible assets. Therefore, the accumulation and management of intellectual capital is the competitive advantage of knowledge-based industries. Intellectual capital valuation is the essential factor in firm valuation. Scholars have presented valuation methods of intellectual capital, such as Tobin’s Q, Knowledge Capital Earnings (KCE), and Value Added Intellectual Coefficient (VAIC). Management power of modern firms is separate from ownership, and easily occurs in the agency problem; therefore, firms must implement corporate governance to solve this problem. Researchers have presented that a complete appraisal of the firm value includes the effect of corporate governance. This study is the first to apply multi-regression models to examine value relevance on valuation methods of intellectual capital, and to further analyze the role of corporate governance for the information and electronic industry in Taiwan. The results show that Tobin’s Q, KCE, and VAIC have a positive relationship to firm value. The characteristic of director board, including board size, the ratio of outside directors, employed independent directors, and the manager concurrently the director, are correlated with the valuation of intellectual capital.
Article PDF
Similar content being viewed by others
Avoid common mistakes on your manuscript.
References
Abbott L.J., Parker S., Peters G.F.: Audit committee characteristics and restatements. Auditing J Pract Theory 23, 69–87 (2004)
Agrawal A., Knoeber C.: Firm performance and mechanism to control agency problem between managers and shareholders. J Financial Quant Anal 31(3), 377–397 (1996)
Ahmed R.: Intellectual capital and firm performance of us multinational firms. J Intellect Capital 4, 215–226 (2003)
Ahmed A.S., Duellman S.: Evidence on the role of accounting conservatism in corporate governance. J Account Econ 43, 411–437 (2007)
Bedard J., Chtourou S.M., Courteau L.: The effect of audit committee expertise, independence, and activity on aggressive earnings management. Auditing J Pract Theory 23, 13–35 (2004)
Bi-Huei T., Chi-Chen W.: The relationship between corporate governance and firm’s delisting of Taiwanese firms. Int J Commer Strateg 1(1), 41–56 (2009)
Bradley K.: Intellectual capital and the new wealth of nations. Bus Strateg Rev 8, 53–62 (1997)
Brickley J., Coles J., Jarrell G.: Leadership structure: separating the CEO and chairman of the board. J Corp Finance 3, 189–220 (1997)
Bukowitz W.R., Petrash G.P.: Visualizing, measuring and managing knowledge. Res Technol Manag 40, 24–31 (1997)
Bushman R., Chen Q., Engel E., Smith A.: Financial accounting information, organizational complexity and corporate governance systems. J Account Econ 37, 167–201 (2004)
Carey P., Simnett R.: Audit partner tenure and audit quality. Account Rev 81, 653–676 (2006)
Cerbioni F., Parbonetti A.: Exploring the effects of corporate governance on intellectual capital disclosure: an analysis of European biotechnology companies. Eur Account Rev 16, 791–826 (2007)
Charles Y., Joseph L., Dean K.: Corporate Governance and Rating System. Sun Bright Co, Taipei (2002)
Chaur-Shiuh Y., Shing-Jen W.: The determinants and effects on earnings informativeness of asset impairments: the role of corporate governance. Int J Account Stud 48, 67–114 (2009)
Chunghuey H., Mao-Chang W.: The effects of economic value added and intellectual capital on the market value of firms: an empirical study. Int J Manag 25, 722–731 (2008)
Core J.E., Holthausen R.W., Larcker D.F.: Corporate governance, chief executive officer compensation, and firm performance. J Financial Econ 51, 371–406 (1999)
Crutchley C., Gamer J., Marshall B.: An examination of board stability and the long-term performance of initial public offerings. Financial Manag 31, 63–90 (2002)
Denis K.D.: Twenty-five years of corporate governance research and counting. Rev Financial Econ 10, 191–212 (2001)
L. , L. : Developing intellectual capital at Skandia. Long Rang Plann 33, 366–373 (1997)
Eisenberg T., Sundgren S., Wells M.: Large board size and decreasing firm value in small firms. J Financial Econ 48, 35–54 (1998)
Ghosh A., Moon D.: Auditor tenure and perceptions of audit quality. Account Rev 80, 585–612 (2005)
Greene W.H.: Econometric Analysis, 6th edition. Prentice Hill Publishing, Upper Saddle River (2008)
HuoShu, P.: The introduction of intellectual capital development collected. In: Intellectual Capital Management. National Cheng-Chi University Taiwan Intellectual Capital Research Center, Hwa Tai Co., Taipei (2006)
Jensen M.C., Meckling W.: Theory of the firm: managerial behavior agency costs, and ownership structure. J Financial Econ 3, 305–360 (1976)
Keenan J., Aggestam M.: Corporate governance and intellectual capital: some conceptualizations. Corp Gov 9, 259–275 (2001)
La Porta R., Lopez-de-Silanes F., Schleifer A., Vishny R.: Investor protection and corporate valuation. J Financial 57, 1147–1170 (2002)
Larcker D., Richardson S., Tuna I.: Corporate governance, accounting outcomes, and organizational performance. Account Rev 82, 963–1008 (2007)
Leuz C., Nanda D., Wysocki P.: Earnings management and institutional factors: an international comparison. J Financial Econ 69, 505–527 (2003)
Lev B.: Intangibles: Management, Measurement and Reporting. Brookings Institution Press, Washington, DC (2001)
Lev B., Zarowin P.: The boundaries of financial reporting and how to extend them. J Account Res 37, 353–389 (1999)
Li J., Richard P., Haniffa R.: Intellectual capital disclosure and corporate governance structure in UK firms. Account Bus Res 38, 137–159 (2008)
Mehran H.: Executive compensation structure, ownership, and firm performance. J Financial Econ 38, 163–184 (1995)
Pulic, A. (1998) Measuring the Performance of Intellectual Potential in Knowledge Economy. Available at: http://www.vaic-on.net/papers.html
Robert, S., Chih-Hung, L., Yi-Tsung, L., Jennifer, W.: Intellectual Capital Valuation and Model Analysis. collected in Intellectual Capital Management, National Cheng-Chi University Taiwan Intellectual Capital Research Center, Taipei: Hwa Tai Co. (2006)
Roger C., Chih-Yao C., Lan-Fen W., Wen-Chih L.: The Ohlson valuation framework and value-relevance of corporate governance: an empirical analysis of the electronic industry in Taiwan. NTU Manag Rev 15(2), 123–142 (2005)
Roos J., Edvinsson R.L., Dragonetti N.: Intellectual Capital: Navigating in the New Business Landscape. New York University Press, New York (1998)
Shiao-Yan H., Yu-Chih L., Chi-Chen L., Chih-Cheng S.: An integrated analysis of intellectual capital, value added intellectual capital and enterprise performance. Taiwan Acad Manag J 8(1), 27–42 (2008)
Vafeas N.: Audit committees, boards and the quality of reported earnings. Contem Account Res 22, 1093–1122 (2005)
Whidbee D.: Board composition and control of shareholder voting rights in the banking industry. Financial Manag 26, 27–41 (1997)
Yermack D.: Higher market valuation of companies with a small board of directors. J Financial Econ 40, 185–211 (1996)
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Wang, MC. Value relevance on intellectual capital valuation methods: the role of corporate governance. Qual Quant 47, 1213–1223 (2013). https://doi.org/10.1007/s11135-012-9724-1
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11135-012-9724-1