Abstract
The present research inspects the correlation amid intellectual capital (IC) and the financial performance (FP) of firms listed in the NSE 500 index. The evaluation is grounded on data obtained from the CMIE PROWESS database, encompassing the decades 2014 to 2023. The sample for this study comprises 237 companies representing seven distinct industries. The present work utilizes the MVAIC model, which enhances the conventional VAIC approach by rectifying significant deficiencies identified in previous Indian studies, so resulting in increased accuracy and robustness. The results indicate a strong and favourable correlation between the efficiency of (IC) and critical FP parameters including Return on Equity (ROE), Return on Assets (ROA), and Return on Capital Employed (ROCE). This holds particularly true for SCVA and VACE, since they demonstrate a substantial and favourable impact on these measures, whereas, for VAHU, there is no statistically significant effect. The recently implemented variable VARCE exhibits a robust association with both ROE and ROA. The implementation of a dynamic panel model utilizing the generalized method of moments (GMM) underscores the importance of lagged variables. Incorporating the lagged dependent variable into the GMM dynamic panel model reveals its substantial influence on the current FP metrics. The substantial impact of the dependent variable highlights the enduring nature of FP, indicating that companies with robust historical performance are more inclined to sustain or enhance their financial results.
Keywords: Dynamic Panel Estimation, FP, GMM Model, Intellectual Capital, MVAIC, Panel Data.