Proceedings of the 8th International Conference on Intellectual ...

2.2 Prior research
Maria Cristina Morariu
For <strong>the</strong> first time, VAICTM was tested by Pulic (2000) on UK companies during 1992-1998. He has
found out that <strong>the</strong> average values <strong>of</strong> VAIC and MB exhibited a high degree <strong>of</strong> correspondence.
Regarding UK companies, similar results are obtained by Zeghal and Maaloul (2010) that replicated
<strong>the</strong> study using 2005 data. Investigating UK banks over 1999-2005, El-Bannany (2008) found that
bank’s efficiency, pr<strong>of</strong>itability and risk have positive impact on HCE. These results are in line with
those obtained by: Bramhandkar et al. (2007) in <strong>the</strong> case <strong>of</strong> drugs industry traded on North American
stock exchanges, Joshi et al. (2010) in <strong>the</strong> case <strong>of</strong> Australian banks, Tan et al. (2007) in <strong>the</strong> case <strong>of</strong>
Singapore but opposed to those obtained in <strong>the</strong> case <strong>of</strong> Hong Kong (Yu et al., 2010) where physical
and financial assets are critical when evaluating a company’s business performance.
Taking a cursory look at <strong>the</strong> studies conducted in <strong>the</strong> emerging economies, Firer and Williams (2003)
investigated <strong>the</strong> association between efficiency <strong>of</strong> value added <strong>of</strong> <strong>the</strong> major components <strong>of</strong> a firm’s
resources and corporate performance in South Africa. Empirical findings suggest physical capital
remains <strong>the</strong> most significant underlying resource <strong>of</strong> corporate performance. Similar results are
obtained by F-Jardon and Martos (2009) in <strong>the</strong> case <strong>of</strong> Argentinean wood manufacturers who found
that <strong>the</strong> only dimension <strong>of</strong> IC directly affecting company’s performance is SC.
Moving to ano<strong>the</strong>r continent, Chen et al. (2005) analyze <strong>the</strong> relationship between VAIC and MB as
well as corporate performance for all public Taiwanese companies during 1992-2002. This study
provides empirical evidence that investors place higher value on firms with better IC efficiency, and
that firm with better IC efficiency yield greater pr<strong>of</strong>itability and revenue growth. In line with <strong>the</strong>ir results
are those obtained by Tseng and Goo (2005), as <strong>the</strong>y concluded that IC components positively
influence <strong>the</strong> corporate value <strong>of</strong> listed Taiwanese manufacturers. Several studies were conducted in
Malaysia too. Accordingly, Goh (2005) measured <strong>the</strong> IC performance <strong>of</strong> Malaysian commercial banks
during 2001-2003. The result showed that HCE is higher than CEE for both domestic and foreign
banks. For <strong>the</strong> same country and sector, similar results are obtained by Ting and Lean (2009) who
found that for 1999-2007 period CEE have significant positive effect on pr<strong>of</strong>itability while SCE has
negative effect. Surprisingly, <strong>the</strong> results obtained by Muhammad and Ismail (2009) are somehow
different in that way that HCE and SCE do not influence <strong>the</strong> pr<strong>of</strong>itability. However, CEE shows
positive and significant relationships with company’s pr<strong>of</strong>itability. Prabowo and Soegiono (2010)
analyze <strong>the</strong> association between government ownership and IC performance and found that
Indonesian banks are not optimal in capitalizing <strong>the</strong>ir IC. In India, Kamath (2008) studies <strong>the</strong>
relationship between IC components with traditional measures <strong>of</strong> performance in <strong>the</strong> drug industry
during 1996-2006. The results show that HC has a major impact on <strong>the</strong> pr<strong>of</strong>itability and productivity <strong>of</strong>
<strong>the</strong> firms. In addition, <strong>the</strong>re is no significant association between <strong>the</strong> size and leverage <strong>of</strong> <strong>the</strong> firm with
its MB and secondly, <strong>the</strong>re is no relation between <strong>the</strong> firm’s financial performance and its productivity.
These results are confirmed one year later by Ghosh and Mondal (2009) who replicated this study
considering 1996-2006 period.
Regarding <strong>the</strong> research conducted in <strong>the</strong> case <strong>of</strong> European emerging economies, we can notice <strong>the</strong>
results <strong>of</strong> Buszko and Mroziewski (2009) that developed and applied <strong>the</strong> index <strong>of</strong> IC to construction
companies registered in Poland, during 2000-2005 in relation to <strong>the</strong> growth <strong>of</strong> <strong>the</strong>ir net pr<strong>of</strong>it. They
found <strong>the</strong> quality <strong>of</strong> IC components directly affects companies’ financial performance, pr<strong>of</strong>it growth
rate and competitive position. Similar results are obtained by Molodchik and Bykova (2011) in <strong>the</strong>
case <strong>of</strong> 350 Russian industrial enterprises analysed for 2005-2007 period.
2.3 Research hypo<strong>the</strong>ses
Based on <strong>the</strong> conclusions reached by <strong>the</strong> above reviewed studies, it may be argued that a firm with
higher IC performance is expected to have higher rate <strong>of</strong> pr<strong>of</strong>itability and also it may experience
higher productivity. Thus, in our study we predict a positive relationship between companies’
performance and IC performance <strong>of</strong> <strong>the</strong> related Romanian companies. Accordingly we propose for
examination a total <strong>of</strong> 12 hypo<strong>the</strong>ses:
H1a. VAICTM is positively associated with market valuation.
H1b. VAICTM is positively associated with pr<strong>of</strong>itability.
H1c. VAICTM is positively associated with productivity.
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