MFRS 7 improves the users’ understanding of company’s financial reporting regarding the financial risks and managing their risks ( MIA 2010). Adds additional new disclosures regard the financial instruments classification ( IFRS 7.6) to those formerly required through IAS 32 Financial Instruments: Disclosure and Presentation. therefore, the IFRS 7 separates the disclosure matters to those formerly required by IAS and put all financial instruments disclosure in independent standard (i.e. IFRS 7 Financial Instruments: Disclosure). The scope of IFRS 7 covers disclosures of two groups namely the first group is disclosing financial information about the significance of financial instruments. For instance, Statement of financialposition, Statement of comprehensive income, and other disclosures (information about the hedge accounting, fair value and the changes in fair value) ( IFRS 7.7- 7.29). The second group is information on risks emerging from financial instruments groups. For instance, information about qualitative disclosures, quantitative disclosures, credit risks, market risks, and liquidity risk ( IFRS 7.33-7.42).
It has been always questioned and discussed that why a company’s market value is different than its book value. Due to several factors, the value priced at stock exchanges might be even ten times higher than the value reported on historical balance sheets. Academicians and practitioners searched for the possible sources of this value difference. Although the balance sheet mirrors the company’s financialposition as of a specific date, historical cost principle of accounting does not allow. Fair value accounting helps close the gap to some degree, however by its nature; balance sheet is a static financial statement. From the valuation viewpoint, the company value is the present value of free cash flows expected in the future. It is an implicit assumption that the cash flows are generated by the exploiting the assets, both tangibles and intangibles. The question arises at this point; are there any other sources of value which are invisible and not reported on the balance sheet. Intellectualcapital comprises those invisible factors.
Abstract: The changing context within which businesses today compete requires deployment of intangible assets in order to achieve competitive position on the market. The growing importance of intellectualcapital has been challenging the tra- ditional financial reporting system, which is not capable to meet the information needs any more. The article provides an overview of various intellectualcapital reporting systems and highlights their key concerns. The selected list of intellectualcapital reporting practices serves as an information basis for business leaders to raise the awareness, to consider pros and cons of intellectualcapital reporting and to facilitate a broader acceptance of a new reporting practice.
As Pakistan is a developing country and has been facing with a lot of issues to compete in a competitive world. The author suggests that Pakistani companies can achieve higher competitive position in the global market by considering and investing in a new product development, technology and in the intellectualcapital (Amjad 2006). Now it’s time for a Pakistan to take steps for developing its economy more competitive and knowledge intensive otherwise country loses its share in the global world. Therefore this study emphasizes that intangible assets/intellectualcapital have a critical role in the better firm performance in today’s knowledge based economy.
thousand per country, in Japan - from $ 25 thousand. The standard European patent for 16 countries of the European Union costs around 25 thousand Euros. The task of foreign patenting of inventions becomes a national task since it allows to secure the priority of Ukraine in the achievements of science and high- tech production and to increase Ukraine's international reputation in the fields of science and production of high- tech products, to provide the position of a country with developed intellectualcapital.  On behalf of the Government of Ukraine. It is essential to improve the relations in the sphere of intellectual property in the direction of more accessible and cheaper recognition of intellectual property of inventors and to obtain an individual right for the inventions by them. For example, in Ukraine, more utility models are patented than inventions, i.e. there are 73% of models and 27% of inventions in the overall volume of the inventions patented. In neighbouring Poland, 9 inventions have attributed to each utility model. The main reason for such situation is financial. In Ukraine, a utility model patent can obtain cheaper, more comfortable and faster. At the same time, the level of the legal protection of such patents is much lower, and it is valid only for 10 years instead of 20 years. It is a characteristic feature of Ukraine whereas in the developed countries this form of protection for new developments is not accessible at all because from the concept of "utility model" it follows that such models usually protect less significant developments. There is also one more alarming fact: more than 90% of utility model patents registered by Ukrainian inventors abroad for the period 2007-2017 have obtained in Russia. In the face of an unannounced war with Russia, which has been going on since 2014, such dynamics are threatening. Altogether
None of the public universities in the Czech Republic creates a separate document entitled IC report. Universities do not use the term „intellectualcapital“. Annual reports predominantly monitor mandatory structure according to the Ministry framework. Due to the created IC disclosure index can be noted, that annual reports contain information about IC and intangible processes. Indicators that the Ministry requires, can be divided into individual components of IC, so we can talk about a potential of current university annual reports to create IC reports, however especially interconnectivity and interdependence of individual areas are missed. According to Leitner (2002) the IC report should contain the goals of higher education policy set by Ministry, including goals given by the university. In a clear response to goals (political and organizational) should be listed intangible resources, or IC, divided into HC, SC and RC components. Information on intangible resources should be reported at a high level. High level of IC reporting constitute placing a monetary value or other numerical expression for variables such values become, including placing thorough narrative interpreting the values, and preferably in time series indicating the trends. Again in relation to those intangible resources should follow the key processes that are by public universities realized, for example education, research, development and innovation, commercialization, knowledge transfer, service and social affairs etc. Emphasis should be focus on the interconnectedness, and therefore, it should be clear what the key processes the university realizes, what values these processes take and in what relation they are to IC. Results of key processes affect stakeholders, so this influence should also be interpreted stating the specific impact on each stakeholder. In such form the IC report shows not only the process of knowledge creation at public university, but also demonstrates the processes of value creation, competitiveness, sustainability and a potential of public universities.
Let us put Becker and Hart together with the little variation of our own for good measure. The conventional and enforcing moral enterpriser attempts to reproduce and even grow ethical capital, but on the basis of MacIntyre‟s thesis, they really have their work cut out. Potentially in Western society then, traditional deference, bits of religious morality, a democratic ethos, and profit-driven economics all have to somehow be made to hang together. One option, like the Lipsky (1980) bureaucrat, is that they are selective in the rules and practices they try to reproduce. Perhaps an obvious tactic is to try to stick with the profit-motive and business efficiency, and lose the ethical fragments that are out of sympathy with this. Yet economists themselves (Layard, 2005) are returning to moral philosophy, precisely because the profit-motive and purchaser power became ends in themselves, detached from what utilitarianism was originally about (like other philosophies before it in somewhat different ways) – happiness, well-being, the good life. While wealth creation makes a positive difference in peoples lives up to a point, other things can become more important.
focused on intangible and intellectualcapital would require a different emphasis with companies that have a different focus. Guthrie (2001) adds that intellectualcapital is influential in determining the value of the company and the performance of the national economy. So that we can develop metrics that can be used to record and report the value of the company. IntellectualCapital (IC) play an important role in the creative industries, so the management in this industry requires a supply of information from the Management accountants in management. According Tayles (2007), the manager realizes that the level and form of IC in the company affecting application of management accounting. Guthrie (2001) believes that the IC in this new century will be essential in determining the value of the company and even the national economy. Based on empirical evidence revealed Sousa & Alves (2012) the value creation process is strongly associated with the level of IC. The study also examined the effect of mediation Management Accounting System through a direct positive effect on the IC. 'Cities' General IntellectualCapital Model' (CGICM) is a transversal approach that covers all economic activities of the city or all of the micro-cluster assembled economy where economic activity. CGICM essentially based on a model for countries that are developed by Edvinsson and Malone (1997) and Bontis (2002). The intellectualcapital model holds several relevant promises for making management accounting more intelligible. These are: The formulation of a basis for developing management
Finance is the life-blood of business. It is rightly termed as the science of money. Finance is very essential for the smooth running of the business .Finance controls the policies, activities and decision of every business.“Finance is that business activity which is concerned with the organization and conversation of capital funds in meeting financial needs and overall objectives of a business enterprise”. Financial management is that managerial activity which is concerned with the planning and controlling of a firm financial reserve. Financial management as an academic discipline has undergone fundamental changes as regards its scope and coverage. In the early years of its evaluation it was treated synonymously with the rising of funds. In the current literature pertaining to this growing academic discipline, a broader scopes as to include in addition to procurement of funds, efficient use of resources is universally recognized. Financial analysis can be defined as a study of relationship between many factors as disclosed by the statement and the study of the trend of these factors. The objectives of financial analysis is the pinpoint of strength and weakness of thebusinessundertakenbyregroupingandanalyzingoffiguresobtainedfromfinancial statement and balance sheet by the tools and technique of management accounting. Financial analysis is as the final step of accounting that result in the presentation of final and the exact data that helps the business manager creditors and investors. Financial performance means firms overall financial health over a given period of time.
Considering the statistical results of the components of intellectualcapital and its relationship with Refined EVA, it can be concluded that there is a significant and positive relationship between human capital and Refined EVA. Human capital is the basic element of intellectualcapital. Human capital relates to factors such as employee knowledge, their ability and skill (Zou, Lee and Thou, 2004, p. 68). Human capital is the largest and most important intangible asset of an organization that ultimately provides customers with the services they require or solutions to their problems (Gash and Mandel, 2009, 371). Also, human capital is internal capital among individuals, and the organization cannot acquire it (Mohammadi, 2014, p. 21). Human capital in a company is leverage for the company's development or decline. As much as human capital is stronger, the company benefits from higher productivity and growth of performance. In insurance companies, strong human capital attracts more customers and thus creates more value for the company. Rezaei et al. (2009), Namazi and Ebrahimi (2009) found similar results in their research about the direct relationship between intellectualcapital and company performance. In addition, the results of Chen et al. (2005) in Taiwan Stock Exchange and similar research by Ahmad Khan et al. (2012), Leibo et al. (2011) and Wang (2008) suggested a positive relationship between intellectualcapital and company performance. In the case of the components of physical capital and its relationship with Refined EVA, it can be concluded that there is a significant and positive relation between the physical capital and the Refined EVA. Physical capital represents the knowledge or value that communicates between external sources of an organization such as customers, suppliers of goods and services, creditors, distribution networks and channels, and etc. (Bozolan & Risari 2003, 558-543). Foreign sources create positive recognition for the company through the symbol, reputation, customer loyalty, business ability, capacity to connect with financing units and environmental activities (Saleh et al., 2008, p. 28). The more companies keep the loyalty of customers, the greater avoid the cost of attracting new customers and reach the higher profitability. In the insurance industry, companies make profits with the acquisition and maintenance of loyal clients and investors without paying re-marketing costs, which will create higher
Regarding the first hypothesis of this study, results of goodness of fit on accidental effects pattern to data of this study indicate that efficiency coefficient of applied capital (VACA) on assets return has direct significant effect. The variables of human capital efficiency and structural capital efficiency also have direct impact, yet with considering probability amount of significance test of these variables’ coefficient, the effect of these coefficients on assets return is meaningless. The amount of efficiency coefficient of applied capital equals 66.49 which indicate that this finding is consistent with researches of Zéghal and Maaloul (2010), Purzamani et al. (2012), Namazi and Ibrahimi (2009). But the difference is in it that variables of human capital efficiency and structural capital efficiency on return on assets are not significant. This could said that human resources have no attention to produce value through intellectualcapital.
Table 2 shows the correlations between variables in this study. Spearman’s Rank Correlation Coefficients and their parametric counterparts, Pearson Correlation Coefficients, were employed to determine bivariate relationships among the variables. Figures without brackets are the results of Spearman’s evaluation, while the others within brackets are those of Pearson’s. It can be seen that the results of the Spearman’s correlation test show that intellectualcapital has a significant positive correlation with corporate financial performance. VAIC is positively and significantly correlated to HCE and SCE. It is worth noting that HCE and SCE will not be regressed against VAIC. VAIC is also positively and significantly correlated to ROA, ATO, RG and OCF, suggesting that intellectualcapital is reflected in the financial performance of the firms under study. HCE and SCE are significant and positively correlated to all the independent variables. CEE is positively correlated to ROA, ATO, OCF and RG, but is not statistically significant with the latter. CEE is the most highly correlated to ROA, suggesting that capital plays a major role in return on assets. Human capital (HCE) is the most highly correlated to OCF, meaning that human capital positively influences the firm’s operating cash flow.
is associated with a negative effect between HC and ROA, then the business expansion undertaken by Islamic banks in Indonesia has not used sufficient human resource competence to exploit expansion. SC efficiency has increased with increasing ROA, but not yet fully supported by HC. Some studies have shown that SC has a significant positive effect on ROA (Rehman et al., 2012; Rehman et al., 2011; Salman et al., 2012). While other research states that there is no statistically significant influence between SC and ROA on the banking sector in Turkey (Ozkan et al., 2016). The SC has no significant effect on profitability in financial institutions in Malaysia and Australia (Joshi et al., 2013; Ting and Lean, 2009). CE has a significant positive effect on ROA. This indicates that the high value of CE, Islamic banks in Indonesia are able to utilize the CE. If one unit of CE produces greater profits than other companies, then the company is better able to use its CE. Thus, a better utilization of the CE is part of the intellectualcapital of companies (Pulic, 1998; Pulic, 2016). Several studies shown that CE has a positive effect on the value added banking in Indonesia (Rehman et al., 2012; Rehman et al., 2011; Ulum et al., 2014). BS has a significant positive effect on ROA. The number of board membership more, can increase the number of variations of the skills and capabilities of the board (Daily et al., 1999; Eisenberg et al., 1998; Naranjo-Gil et al., 2008; Raheja, 2005), but often they will be more difficult to coordinate because of the amount of interaction is more among the members of the board. In some studies, BS has a significant negative effect to profitability (Bennedsen et al., 2008; Chiang and Lin, 2011; Hassan and Farouk, 2014; Nath et al., 2015; Rashid et al., 2010; Rouf, 2011). BD has a significant negative effect on ROA, shows that the board of commissioners’ age reflected in the BD has a significant negative effect on ROA, meaning that the board of commissioners has not been able to increase profits and has not increased the internal operation of Islamic banks in Indonesia. In some research the BD and ROA has a negative and significant effect (Bennedsen et al., 2008; Darmadi, 2011; Hassan et al., 2015).
During the global financial crises, the prominence of corporate governance was realized after the major loopholes identified in corporate policies and conspicuous corporate scandals all over the world. Developed countries have passed several laws such as the “Say on Pay” or the “Sarbanes-Oxley Act” to protect the shareholder's wealth. On the contrary, developing countries are still thriving to gain effective corporate governance recognition. This study examined the moderating effect of intellectualcapital on the relationship between corporate governance and firm performance. The current study uses four-year panel data from 2012 to 2015. Linear regression, correlated panels corrected standard errors (PCSEs) are used in the analysis. The findings of the study indicate that the intellectualcapital has a significant effect on the relationship between board size, board financial expertise, CEO duality, gender diversity and firm performance (ROA). On the other hand, it does not seem to moderate the relationship between board independence and firm performance (ROA). Similarly, the findings indicate that intellectualcapital has a significant relationship between board size, board independence, CEO duality, gender diversity and firm performance (ROE). Moreover, the empirical results highlight the significance of intellectualcapital for regulations and policy making.
1. INTRODUCTION & LITERATURE REVIEW The development in the field of economy has an impact on the significant changes toward business management and strategy of companies in Indonesia. One of the companies experiencing intense competition in the economy of Indonesia is company on finance industry. Finance company in Indonesia continues to work in improving business strategies to cope with economic development by improving financial performance and market value. Mangkunagara (2002: 22) reveals that the performance is the result of work both in quality and quantity achieved by a person in carrying out the task according to the responsibility given. Financial performance is a financial achievement illustrated in the financial statements of the company that is the balance sheet and financial performance describing the company's business (operation income). The profitability of a company can be measured by linking the profits derived from the firm's primary activities with the assets used to generate profits (Muslich, 2003: 44). Market value is a ratio that gives a measure of management ability to create a market value of its business above investment costs, aiming to be the benchmark that links the relationship between the common stock price and the overall company’s earning Sugiono and Untung (2008: 73).
International Accounting Standards (International Accounting Standards Board,1998) are further devoted to these attributes that make a difference between identifiable intangible assets and unidentifiable goodwill. Goodwill is the subject of other standard International Financial Reporting Standard 3 created by the Business Combinations project. Identifiable intangible assets should be separable and arise from contractual or other legal rights. These requirements do not meet a lot of intangible resources which can bring to company future economic benefits and may have significant value.
capital a volatile and elusive subject, but he believes that, when discovered and utilized, it makes the organization capable of competing with a new resource in the external environment. Edvinsson et al. (1996), state that intellectualcapital is a kind of knowledge that can be converted into value. Brookings (1996), states that intellectualcapital is a combination of four major parts: market assets, human-centered assets, intellectual assets and infrastructure assets. Roos (1997), sees intellectualcapital as all processes and assets, which are not presented in traditional balance sheets. It also includes those intangible assets (such as trademarks and patents) which are taken into account by modern accounting. Hence, intellectualcapital is the sum of organization's knowledge of its members and practical application of that knowledge. Stewart (1997) defines intellectualcapital as intellectual material such as knowledge, obligations, intellectual property (assets), and experience that can create wealth. Bontis (1998), defines intellectualcapital as to search for, and effective use of knowledge (as manufactured goods) compared to data (raw materials). Bontis el al. (2000) in another definition state that in a simple classification intellectualcapital has three components of human capital, structural capital and relational capital.
IntellectualCapital is often divided into different components: human capital (HC), relational capital (RC), and structural capital (SC). HC includes knowledge, skills, and experience owned by the employees of the company. Structural capital (SC) refers to knowledge that attached to the structure and organization process, including corporate culture, share of knowledge, technology, and availability of information systems. Relational or Customer capital is a good relation (association network) owned by company to its stakeholders. The relation here refers to the supplier relations, customer loyalty, goodwill and a good relation with government and society in general. Petty and  argues that external capital defined as company’s ability to identify the need of the market, so that a good relation may be build between company and external parties . It is argued that between these two IC components is dependent-independent each other.  stated that the creation of patent highly depends on the HC, but after it is completed, it considered as company’s SC. Information on intellectualcapital is important to stakeholders in their decision-making. The greater disclosure provide by a company might reduces the uncertainty be faced by investors and thus it will reduce company’s cost of capital. Even though disclosing intellectualcapital still voluntarily done by the company, but the number of companies that realized the importance of reporting non-financial information is increasing over years.
The development of a current core capability baseline for the firm to indicate the level of entrenchment. This is achieved through the measurement of the current status in the firm by utilising the intellectualcapital indicators per capability. This enables the reflection of current evidence of intellectualcapital per capability (or lack of it) against the stated ideal indicators. This information can be utilised in investment prioritisation decisions related to core capabilities and in continuous management of intellectualcapital with a focus on growth. This action reflects the measurement part of the IntellectualCapital Framework and can also be combined with other quantitative measurements related to intellectualcapital such as single aggregate measures or measures aimed at the individual components of intellectualcapital to reflect a variety of relevant measurements (see the approaches of Roos, et al. 1997; Stewart, 1997; Stewart, 2001; Sullivan, 2000). A description of the key assumptions associated with the core