Does intellectual capital determine the firm's investment efficiency? Evidence from Indonesia

Siskha Nur Khasanah; Pan Wei Hwa; Muhammad Saiful Hakim

doi:10.38035/dijefa.v5i4.3150

Authors

Siskha Nur Khasanah Department of Business Management, Institut Teknologi Sepuluh Nopember
Pan Wei Hwa Department of Business Administration, National Yunlin University of Science and Technology, Taiwan
Muhammad Saiful Hakim Department of Business Management, Institut Teknologi Sepuluh Nopember, Indonesia

DOI:

https://doi.org/10.38035/dijefa.v5i4.3150

Keywords:

Capital Employed, Human Capital, Investment Efficiency, Structural Capital

Abstract

Companies now recognize that success depends not only on physical assets but also on effectively utilizing intangible assets like intellectual capital to outperform competitors. In other hand, achieving the most effective investment decisions is a core concern in corporate finance and a primary objective for management in a company. However, uncertainty of outcome and a lack of measurement metrics often lead to inefficient investments. This study intends to assess the relationship between intellectual capital (IC) on investment efficiency (IE). The data is processed using panel data regression on non-financial public companies in Indonesia with an observation period of 2010-2023. Our analysis discovered that the human capital (HCE) of a firm statistically has a significant positive impact on investment efficiency. Second, the capital component (CEE) is negatively affecting investment efficiency. At the same time, no relationship was found between structural capital and investment efficiency.

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