Intellectual Capital Efficiency Ratio (ICER) and Company Performance: Evidence From Polish Listed Companies

Intellectual capital (IC) plays an increasing role in value creation for companies. IC-oriented companies are also the winners in terms of value creation for shareholders. Therefore knowledge about the state of intellectual capital and its constituents, in addition to standard company analysis based on information from financial statements, is crucial for the complete evaluation of firm standing. Intellectual capital is a subject of many studies, which examines the relationship between its level and different measures of firm performance and other characteristics. Within the last decades there have been a number of methods developed to measure intellectual capital and its constituents. Alas, none of these methods has been commonly accepted. This article contributes to the intellectual capital literature with proposition of new method for IC measurement - Intellectual Capital Efficiency Ratio (ICER) and investigation of associations between this ratio and its constituents with different measures of firm performance. Research was conducted for the year 2011 based on the sample of 211 companies listed on the Warsaw Stock Exchange. This study reveals strong, significant and positive relationship between ICER ratio and its constituents with company performance measures: return on assets (ROA), return on equity (ROE), economic profit margin (EPM) and significant and positive but weaker relationship between ICER ratio and its components and shareholder value measure - price to book value (P/BV).