The Impact of Intellectual Capital Efficiency on Market Value: An Empirical Study from Iranian Pharmaceutical Companies

The increasing gap observed between market value and book value of many companies has taken into account towards investigating the impact of intellectual capital (IC) on business performance. IC has been widely considered as a critical tool to deliver the business successfully in an intensive competitive environment. Various models have been suggested to measure the numerous aspects of IC, i.e. the Skandia navigator, Tobin’s Q, and value added intellectual coefficient (VAIC). The aim of this study is to examine the relationship between intellectual capital and market value of pharmaceutical companies, using the VAIC developed by Ante Pulic (2000). Six-year data was obtained from audited financial reports in Iranian Exchange Stock, and used to calculate human capital, structural capital, and capital-employed efficiency of pharmaceutical companies. The results obtained using correlation and multiple regression analysis failed to support the impact of IC on market value. Practically, IC efficiency can be applied as a benchmark and strategic indicator to assess firm value. This study is a pioneering attempt in Iran to measure the impact of IC efficiency on market value using cross sectional time series data.