Nonlinear Impact of Intellectual Capital on The Financial Performance of Non-Financial Enterprises: Evidence from Vietnam

Abstract

Purpose: This study aims to examine the non-linear impact of intellectual capital (IC) and corporate financial performance (FP). IC is measured by the Value Added Capital (VAIC) and Market Value Rate (MBR); corporate FP is measured by the Return on Assets (ROA).
Design/methodology/approach: This study employs a quantitative approach and uses panel data regression analysis in Stata 17. Data was collected from the annual reports of 143 non-financial companies listed on the Ho Chi Minh City Stock Exchange (HOSE) during the period 2018–2022.
Findings: The results show that the relationship between IC and FP is non-linear, inverted-U shaped. An increase in IC will certainly increase FP up to a certain threshold. However, excessive investment in IC will decrease FP. Therefore, Vietnamese businesses need to be cautious in investing in and managing IC.
Originality/value: This research adds the MBR variable to the model to examine the relationship between IC and FP, rather than relying solely on VAIC. This implies that VAIC should not be used solely to measure IC; other measures should also be considered.