Determining the Impact of Intellectual and Human Capital on the Firm's Value: A Case of the US Banking Sector
DOI:
https://doi.org/10.65080/ajbmss.v1i2.31Keywords:
Intellectual capital, human capital, firm value, firm size, US commercial banks, correclation analysisAbstract
Introduction: The following research study has examined the effect of intellectual and human capital on firm value in the U.S. banking industry, particularly the moderating influence of firm size.
Methods: Based on the Resource-Based View (RBV) and Human Capital Theory, the study examined how intangible assets enhance competitive advantage and sustainable value creation. With a panel dataset of 30 NYSE-listed U.S. commercial banks over 2010-2024, and Generalised Least Squares (GLS) regression to account for heteroscedasticity and autocorrelation, the research discovered that human capital, as represented by revenue per employee, had a significant positive effect on firm value (β = 0.063, p-value = 0.004). However, as represented by goodwill and intangible assets, intellectual capital had a significant negative effect (β=-0.038, p-value= 0.00), indicating that not all intangible investments are properly utilised. The findings showed that firm size significantly moderates the relationship between goodwill and firm value (β = 2.139, p-value = 0.00) and between net profit per employee and firm value (β = 0.002, p-value = 0.00). This implied that the size of the firm played a significant role in moderating these relationships, as big banks are in a better position to leverage intellectual and human capital in value creation.
Results: These results emphasised the significance of strategic consistency in managing intangible resources. In practice, the research indicated that it is essential for banks not only to acquire intangible assets but also to integrate and leverage them effectively. It also suggested firm-specific strategies by size to maximise the value obtained from human and intellectual capital in an evolving, knowledge-based industry.
Downloads
References
Adewumi, A., Ewim, S. E., Sam-Bulya, N. J., & Ajani, O. B. (2024). Advancing business performance through data-driven process automation: A case study of digital transformation in the banking sector. International Journal of Multidisciplinary Research Updates, 8(02). https://doi.org/10.53430/ijmru.2024.8.2.0049
Agostini, L., & Nosella, A. (2023). Intellectual capital and resilience: evidence from two cases of SMEs. Knowledge Management Research & Practice, 21(5), 929-942. https://doi.org/10.1080/14778238.2022.2103047
Akgün, A. İ., & Türkoğlu, S. P. (2024). Intellectual capital and performance of listed firms during the global financial crisis: the effects of legal origin. International Journal of Organizational Analysis, 32(4), 759-785. https://doi.org/10.1108/IJOA-01-2023-3587
Ali, B. J., & Anwar, G. (2021). Intellectual capital: A modern model to measure the value creation in a business. Intellectual capital: A modern model to measure the value creation in a business. International journal of Engineering, Business and Management, 5(2), 31-43. https://dx.doi.org/10.22161/ijebm.5.2.4
Al-Khatib, A. W. (2022). Intellectual capital and innovation performance: the moderating role of big data analytics: evidence from the banking sector in Jordan. EuroMed Journal of Business, 17(3), 391-423. https://doi.org/10.1108/EMJB-10-2021-0154
Appah, T. R., Yuniarti, S., Sisharini, N., Sunarjo, S., & Yahya, N. (2023). Does profitability matter in the relationship between intellectual capital and firm value? Media Ekonomi Dan Manajemen, 38(1), 57-70. Available from: https://eprints.unmer.ac.id/id/eprint/3664
Bangara, S. N., Chesoli, J. W., Ngacho, C., & Nyanga’u, A. (2024). Human capital disclosure and firm value: An investigation of Kenyan and South African listed companies. Sch J Econ Bus Manag, 9, 242-256. https://doi.org/10.36347/sjebm.2024.v11i09.001
Cao, J., Law, S. H., Samad, A. R. B. A., Mohamad, W. N. B. W., Wang, J., & Yang, X. (2022). Effect of financial development and technological innovation on green growth—analysis based on spatial Durbin model. Journal of Cleaner Production, 365, 132865. https://doi.org/10.1016/j.jclepro.2022.132865
Fischer, H. E., Boone, W. J., & Neumann, K. (2023). Quantitative research designs and approaches. In Handbook of research on science education (pp. 28-59). Routledge. https://doi.org/10.4324/9780367855758
Fitri, R. K., Nurabiah, N., & Priyambodo, V. K. (2024). Does financial technology moderate the relationship between intellectual capital and company performance? Empirical study in Indonesian banking. New Applied Studies in Management, Economics & Accounting, 7(1), 79-97. https://doi.org/10.22034/nasmea.2024.181581
Gerhart, B., & Feng, J. (2021). The resource-based view of the firm, human resources, and human capital: Progress and prospects. Journal of management, 47(7), 1796-1819. https://doi.org/10.1177/0149206320978799
Ghani, R. A., Samah, A. R. A., Baharuddin, N. S., & Ahmad, Z. (2023). Determinants of firm value as measured by the Tobin’s Q: a case of Malaysian plantation sector. Int J Acad Res Account Financ Manag Sci, 13(2), 420-432. http://dx.doi.org/10.6007/IJARAFMS/v13-i2/17268
Hanson, S. G., Ivashina, V., Nicolae, L., Stein, J. C., Sunderam, A., & Tarullo, D. K. (2024). The evolution of banking in the 21st century: Evidence and regulatory implications. Brookings Papers on Economic Activity, 2004(1), 343-389. https://doi.org/10.1353/eca.2024.a943918
Jordão, R. V. D., & Novas, J. C. (2017). Knowledge management and intellectual capital in networks of small-and medium-sized enterprises. Journal of intellectual capital, 18(3), 667-692. https://doi.org/10.1108/JIC-11-2016-0120
Kamukama, N., & Sulait, T. (2017). Intellectual capital and competitive advantage in Uganda’s microfinance industry. African Journal of Economic and Management Studies, 8(4), 498-514. https://doi.org/10.1108/AJEMS-02-2017-0021
Kengatharan, N. (2019). A knowledge-based theory of the firm: Nexus of intellectual capital, productivity and firms’ performance. International journal of manpower, 40(6), 1056-1074. https://doi.org/10.1108/IJM-03-2018-0096
Kingori, G. (2025). Human Capital Disclosure and Firm Value; Does Audit Committee Size Matters. Evidence from Listed Firms in Nairobi Securities Exchange, Kenya. https://doi.org/10.53819/81018102t7044
Kweh, Q. L., Lu, W. M., Ting, I. W. K., & Thi My Le, H. (2022). The cubic S-curve relationship between board independence and intellectual capital efficiency: does firm size matter? Journal of Intellectual Capital, 23(5), 1025-1051. https://doi.org/10.1108/JIC-08-2020-0276
Li, Y., & Zhao, Z. (2018). The dynamic impact of intellectual capital on firm value: evidence from China. Applied Economics Letters, 25(1), 19-23. https://doi.org/10.1080/13504851.2017.1290769
Maditinos, D., Chatzoudes, D., Tsairidis, C., & Theriou, G. (2011). The impact of intellectual capital on firms' market value and financial performance. Journal of intellectual capital, 12(1), 132-151. https://doi.org/10.1108/14691931111097944
Malikah, A., & Nandiroh, U. (2024). Intellectual capital and value of the firm: a systematic literature review. International Journal Of Humanities Education and Social Sciences, 3(4). https://doi.org/10.55227/ijhess.v3i4.777
Mátyás, L., & Sevestre, P. (Eds.). (2013). The econometrics of panel data: handbook of theory and applications (Vol. 28). Springer Science & Business Media. https://link.springer.com/book/10.1007/978-94-009-0375-3
Nguyen, A. H., & Doan, D. T. (2020). The impact of intellectual capital on firm value: Empirical evidence from Vietnam. International Journal of Financial Research, 11(4), 74-85. https://doi.org/10.5430/ijfr.v11n4p74
Ni, Y., Cheng, Y. R., & Huang, P. (2021). Do intellectual capitals matter to firm value enhancement? Evidences from Taiwan. Journal of Intellectual Capital, 22(4), 725-743. https://doi.org/10.1108/JIC-10-2019-0235
Özera, G. (2016). The role of human capital in firm valuation: an application on BIST. https://doi.org/10.1016/j.sbspro.2016.11.012
Pesaran, M. H. (2015). Time series and panel data econometrics. Oxford University Press. https://doi.org/10.1093/acprof:oso/9780198736912.001.0001
Ployhart, R. E. (2021). Resources for what? Understanding performance in the resource-based view and strategic human capital resource literatures. Journal of Management, 47(7), 1771-1786. https://doi.org/10.1177/01492063211003137
Quintero-Quintero, W., Blanco-Ariza, A. B., & Garzón-Castrillón, M. A. (2021). Intellectual capital: A review and bibliometric analysis. Publications, 9(4), 46. https://doi.org/10.3390/publications9040046
Sari, D. K., Hermawan, S., Fitriyah, H., & Nurasik, N. (2022). Does Profitability, Firm Size, and Intellectual Capital Affect Firm Value? Jurnal Riset Akuntansi Terpadu, 15(2), 195-209. http://dx.doi.org/10.35448/jrat.v15i2.16813
Sisodia, G., Jadiyappa, N., & Joseph, A. (2021). The relationship between human capital and firm value: Evidence from Indian firms. Cogent Economics & Finance, 9(1), 1954317. https://doi.org/10.1080/23322039.2021.1954317
Soewarno, N., & Tjahjadi, B. (2020). Measures that matter: an empirical investigation of intellectual capital and financial performance of banking firms in Indonesia. Journal of Intellectual Capital, 21(6), 1085-1106. https://doi.org/10.1108/JIC-09-2019-0225
Tran, N. P., & Vo, D. H. (2020). Human capital efficiency and firm performance across sectors in an emerging market. Cogent Business & Management, 7(1), 1738832. https://doi.org/10.1080/23311975.2020.1738832
Ujwary-Gil, A. (2017). The business model and intellectual capital in the value creation of firms: A literature review. Baltic Journal of Management, 12(3), 368-386. https://doi.org/10.1108/BJM-10-2016-0224
Veltri, S., & Silvestri, A. (2011). Direct and indirect effects of human capital on firm value: evidence from Italian companies. Journal of Human Resource Costing & Accounting, 15(3), 232-254. https://doi.org/10.1108/14013381111178596.
Villaluz, Z. G. (2024). 50 largest US banks by total assets, Q3 2024. Available from: https://www.spglobal.com/market-intelligence/en/news-insights/articles/2024/12/50-largest-us-banks-by-total-assets-q3-2024-86449795
Waititu, P., & Barker, R. (2022). Organisational factors as determinants for online knowledge-sharing behaviour: a Kenyan case study. Communicare: Journal for Communication Sciences in Southern Africa, 41(1), 77-89. Available from: https://journals.uj.ac.za/index.php/jcsa/article/view/1397
Wang, X., & Yu, J. (2023). Accumulating human capital: Corporate innovation and firm value. International review of finance, 23(4), 750-776. https://doi.org/10.1111/irfi.12422
Wang, Z., Cai, S., Liang, H., Wang, N., & Xiang, E. (2021). Intellectual capital and firm performance: the mediating role of innovation speed and quality. The International Journal of Human Resource Management, 32(6), 1222-1250. https://doi.org/10.1080/09585192.2018.1511611
Xu, J., & Li, J. (2022). The interrelationship between intellectual capital and firm performance: evidence from China's manufacturing sector. Journal of intellectual capital, 23(2), 313-341. https://doi.org/10.1108/JIC-08-2019-0189
Yunita, W., & Prastiwi, D. (2021). Effect of intellectual capital on firm value. International Journal of Economics, Business and Management Research, 5(06), 1-12. Available from: https://ijebmr.com/uploads/pdf/archivepdf/2021/IJEBMR_757.pdf
Zieba, M. (2021). Understanding knowledge-intensive business services. Springer International Publishing. https://doi.org/10.1007/978-3-030-75618-5_3
Downloads
Published
Issue
Section
License
Copyright (c) 2025 Abu-Shariq (Author)
This work is licensed under a Creative Commons Attribution 4.0 International License.
