### Create a StudySoup account

#### Be part of our community, it's free to join!

Already have a StudySoup account? Login here

# The-relationship-between-grow-rate-of-intellectual-capital-and-future-profitability-of-pro

### View Full Document

## 7

## 0

## Popular in Course

## Popular in Business

This 9 page Document was uploaded by an elite notetaker on Monday December 21, 2015. The Document belongs to a course at a university taught by a professor in Fall. Since its upload, it has received 7 views.

## Similar to Course at University

## Reviews for The-relationship-between-grow-rate-of-intellectual-capital-and-future-profitability-of-pro

### What is Karma?

#### Karma is the currency of StudySoup.

#### You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 12/21/15

IOSR Journal of Business and Management (IOSR-JBM) e-ISSN: 2278-487X, p-ISSN: 2319-7668. Volume 16, Issue 8. Ver. IV (Aug. 2014), PP 48-56 www.iosrjournals.org The relationship between grow rate of intellectual capital and future profitability of productive companies that accepted in Tehran stock exchange 1Roqayeh Talebi, Mansureh Shajari, Masoud Ghorban hosseini, Naser Arab 4 1Department of Accounting, Saveh Branch, Islamic Azad University, Saveh, Iran. 2 3epartment of Accounting, Tehran Branch, Islamic Azad University, Tehran, Iran 4Department of Accounting, Saveh Branch, Islamic Azad University, Saveh, Iran. Department of Accounting, Saveh Branch, Islamic Azad University, Saveh, Iran. Abstract: Increasing the stockholders’ wealth and explicit prospect of profitability specially is noteworthy for managers. There are various factors involve in companies profitability. Finding these reveal or hide factors and demonstrating their relation with profitability of companies, is a demand from managers and beneficiaries. In recent years, it is talk about a latent resource in companies as intellectual capital and some patterns offered for measuring it; then its relation with different items investigated. In this regard, the present research investigate the relation between grow rate of intellectual capital and future profitability of productive companies that accepted in Tehran stock exchange. For this purpose, the return on sales , return on equity, return on asset and circulating capital return, all used for determining the future profitability; and the financial lever and company size used as control variables. The time scale of this research is from 2008 to 2013. and it covers 97 companies. The results of this research show that there is a direct relation between grow rate of intellectual capital and future profitability of companies. In addition, the financial lever as a control variable has a significant coefficient in all hypothesizes. This result obtained from real data for those managers that increasing the wealth and interest for company is a central point in their long and short time goals, so this is a thinkable issue. Keywords: grow rate of intellectual capital, future profitability, the Tehran Stock Exchange I. Introduction By occurrence the information and technological revolution since 1990, the economical pattern of world changed. In modern economy, knowledge as the most important asset superseded the physical and financial assets (Ghlichli & Moshabbeki; 2007). During the age of cost price industry, for acquiring a trade, it needed to assets, factories, equipments and raw materials but during the information age, this is the efficient usage of intellectual properties that will affect the success or lose of a set. Researchers divided the intellectual properties into three main parts: structural capital; customer capital (relational capital) and human capital. The human capital is including knowledge, skills, experience, ability and talents of companies’ managers and personnel. The human capital is an important and basic capital that cause to generating the value for company and its financial growth. The structural capital is including culture making, thinking method, process, philosophy, system and database. The customer capital (relational capital) is the company ability for protecting its relation with customers and beneficiaries. In fact, we discuss about non tangible elements that exist and success companies exploited them. Many of researchers offered some solutions for determining the value of intellectual capital and they explored its effect on company performance. Thus, it is necessary that managers be aware from value of this hide capital in company and in their policy making they should consider the important position of intellectual properties regard to increasing the stockholders’ worth and company profitability. For reflecting this, in this study we investigated the relation between intellectual properties growth and future profitability of accepted companies in stock exchange of Iran. And by confirming all hypothesizes it found that there is a significant relation between intellectual capital growth rate and future profitability of companies in our statistical society. II. The theoretical basics of research Intellectual capital implications Always the intellectual capital implications were ambiguous and different definitions used for interpreting this concept. The term of intellectual capital firstly introduced by John Kens Galbers in 1969. Many of researchers use some terms such as assets, sources or stimulates of performance stead of capital word. And they replace the intellectual word by terms such as un-sensible, based on knowledge, or non financial. Some jobs such as financial accounting and legal professions have different definitions for this such as fixed non financial assets that haven’t physical and objective existence. There are different definitions for intellectual capital that we mention to them in following. www.iosrjournals.org 48 | Page The relationship between grow rate of intellectual capital and future profitability of productive 1) stewart (2001) believes that intellectual capital is a collection of knowledge, information, intellectual assets, experience, competition and organizational learning that can be used for creating the worth. In fact, the intellectual capital covers all personnel, organizational knowledge and abilities for creating the added-value and results to continuous competition advantages. 2) Bontis (2003) defines the intellectual capital as a collection of non tangible assets (sources, abilities, competition) that are obtained from organizational performance and value making. 3) Edvinsson and Malone (1997) define the intellectual capital as “knowledge and information used for work and creating the value”. 4) Bontis et al (1999) in their article define the intellectual capital as a reservoir of knowledge that is existing in organization in a special point of time. In this definition, the relation between intellectual capital and organizational learning considered. The intellectual properties are non competition assets. Unlike the physical properties that only are used for doing one work in a special time, it can use the intellectual properties simultaneously for doing several important works. For example, the customer supporting system can provide the supporting possible for many thousands of customers in a special time. This is one of the most important superior criterions for intellectual capital than physical ones. As profit is a criterion for measuring the management efficiency, the financial flexibility and operational power and used for managerial decision making and other things, thus increasing the profitability is the only goal for stockholders. This viewpoint drives them to reaching this goal. III. Research history Zéghal and Maaloul (2010) measured the intellectual capital by added-value index and studied its effect on financial, economical and market value performance of 300 Britain’s companies. For measuring the intellectual capital, they used the intellectual added-value coefficient. The obtained results showed that the efficiency effect of intellectual capital has a positive and significant relation with financial and economical performance, but about market value performance, this relation is significant only for technology industry. Also, it found that there is a negative relation between used capital (physical and financial capital) and economical performance but between this capital has a positive and significant relation with market value and financial performance. Chang and Hsieh (2011) studied the relation between elements of intellectual capital and financial, operationa and market performances in Taiwan’s stock exchange for electronic industry. They used the balanced added-value coefficient for measuring the intellectual capital. Their results showed that relation between operational performance and used capital is positive but this performance hasn’t any relation with structural and human properties. In addition, the elements of intellectual capital have a negative relation with financial and market performance. The development and research costs have a positive relation with these three performances but intellectual capital has a positive relation only with operational performance. Maditinos et al (2011) studied the relation between elements of intellectual capital and financial and market performance in Greek’s stock exchange. They used intellectual added-value coefficient for measuring the intellectual capital. Their results show that there isn’t any significant relation between intellectual capital and financial and stock exchange performance and only the relation between human capital and stockholders’ revenue rate confirmed. IV. Research hypothesizes In this study for reaching to research hypothesizes, two main and eight sub main hypothesizes were tested. H1: There is significant relation between intellectual capital and future profitability of accepted companied in Tehran stock exchange. 1) There is a significant relation between intellectual capital and next year return on sales of accepted productive companies in Tehran stock exchange. 2) There is a significant relation between intellectual capital and next year return on equity of accepted productive companies in Tehran stock exchange. 3) There is a significant relation between intellectual capital and next year return on asset of accepted productive companies in Tehran stock exchange. 4) There is a significant relation between intellectual capital and next year circulating capital return of accepted productive companies in Tehran stock exchange. H2: There is a significant relation between intellectual capital growth rate and future profitability of accepted productive companies in Tehran stock exchange. 5) There is a significant relation between intellectual capital growth rate and next year return on sales of accepted productive companies in Tehran stock exchange. www.iosrjournals.org 49 | Page The relationship between grow rate of intellectual capital and future profitability of productive 6) There is a significant relation between intellectual capital growth rate and next year return on equity of accepted productive companies in Tehran stock exchange. 7) There is a significant relation between intellectual capital growth rate and next year return on asset of accepted productive companies in Tehran stock exchange. 8) There is a significant relation between intellectual capital growth rate and next year circulating capital return of accepted productive companies in Tehran stock exchange. Research variables In this research, the intellectual capital growth rate is the independent variable, future profitability ratios (return on sales, return on equity , return on asset and circulating capital return) are the dependent variables and company size and financial leverage is used as control variable. Independent variable For calculating the intellectual capital growth rate, firstlythe intellectual capital value calculated and its change percent respect to last year value of intellectual capital is considered as intellectual capital growth rate. Different methods suggested for calculating the intellectual capital value that in present study we used the Luthy’s method (1998). This relation is as follow: IC = MV − BV Where: IC: is the intellectual capital value; MV: is the market value of company shares; BV: is the book value (stockholders’ equity) of company. In this model time changes of money value is balanced respect to inflation rate in any period, so it can obtain results that are more realistic. T MV −tBV t IC = 1 + I t inf t In this model, IC: is the intellectual capital value; MV: is the market value of company shares in t period; t BV :t:s the book value of company (stockholders’ equity)in t period; and Iinft: is the inflation rate in t period. The needed data gathered from valid references so it can rely on obtained results. In fact, this model used due to not reliance on unavailable and subjective data in calculations. These references are: 1. Financial statements that offered to stock exchange by statistical society companies by using the (Rahaward 3.0) software. 2. Company shares value according to stock exchange notice in desired dates. 3. The notified inflation rate by Central Bank. Finally, the intellectual capital growth rate calculated as follow: ∆ IC = IC –tIC t−1 t IC t−1 Where: ∆IC t is the intellectual capital growth in t period; IC t is the intellectual capital value in t period and ICt-1is the intellectual capital value in the end of t-1 period. The dependent variables As mentioned before, four profitability ratios used as dependent variables. 1. Return on sales : The profit-loss ratio after taxing on total sale 2. Return on equity : The profit-loss ratio after taxing on sum of stockholders’ equity. 3. return on asset: The profit-loss ratio after taxing on sum of total assets . 4. circulating capital return: The profit-loss ratio after taxing on circulating capital. In the first hypothesis, the relation between intellectual capital and future profitability and in second hypothesis the relation between intellectual capital growth rate and future profitability investigated. Control variables www.iosrjournals.org 50 | Page The relationship between grow rate of intellectual capital and future profitability of productive One of the control variables in this research is the company size that measured by normal logarithm of total sale. The other control variable in this research is the ratio of total liability to total asset that used for controlling the ratio of liability and profitability. Research method This is a post-event Research. In this research, we investigated those events that normally happened in the last without any intervention by author. The statistical society and sample of research: The statistical society include accepted companied in Tehran stock exchange during 2008-2013. Sampling was done as systematic elimination means that first, a list of all accepted companies in the stock exchange provided and then those companies that hadn’t the desired sample conditions eliminated and remaining selected as research sample. The following conditions used for this selection: 1. The company accepted in stock exchange in financial year of 2006. 2. For all selected companies the end of financial year during the considered period should be 20 March, so the considered companies’ situation be similar respect to environmental factors related to financial year. 3. The company should not change its financial year during 2006-2013. 4. The company should not be an investiture company or a bank. 5. The book value of company (stockholders’ revenue) should not be negative. 6. The needed information should offered completely by companies for 2008-2013. Based on above conditions, totally 97 companies had these conditions in mentioned period. Table 1 shows the industries grouping and their abundance in statistical sample. Table1- Grouping the industries and their abundance in statistical sample. No Main and sub-main industry abundance 1 Machines and equipments: machines for road making, loom, agriculture 23 2 Food: livestock feed, diary foods, juices, non meaty foods 17 3 Petroleum products: oil and gas extraction, petroleum products 9 4 Industrial multi-branch: industrial multi-branch 4 5 Basic metals: rolling and foundry, metallic products 18 6 Rubber and Plastic: rubber parts, plastic products, tier and tube 10 7 Other 16 Total 97 Data gathering method The library and field method used in this study for data gathering. The theoretical basics of study gathered from books, journals and special web sites in accounting field in both Persian and original languages. In addition, the required financial data gathered from central bank and stock exchange web site, weekly reports of stock exchange and for this purpose, we used the Rahaward 3.0 software. Analyzing and hypothesizes testing method One of the most important stages of study is the statistical data analyzing. By using the correct and proper statistical methods, it can offer the results. For data analysis, the descriptive statistical data (mean and standard deviation) and deductive data (simple and partial correlationcoefficient, simple and multiple regression models) used. For testing the partial coefficient significance of regression in first and second hypothesizes, we used the t-test and the calculated probability value (p-value) used by SPSS software. The test assumptions are as below: H 0 There isn’t any significant relation between independent and dependent variables. H 1 there is a significant relation between independent and dependent variables. If p-value is greater than expected error level (α=5%), the obtained coefficient isn’t significant and it can accept the H 0nd otherwise, (p-value<α), the coefficient is significant and H wil0 be rejected. In both hypothesizes for testing the significance of regression equation we used the F-test and p-value by SPSS software. In multiple regression equation if there isn’t any significant relation between dependent and independent variables, it should be set all independent variables equal to zero. Concerning to multiple regression model, the analyzed hypothesizes are as below: H 0 All regression model coefficients are equal to zero. H : Least, one coefficient of regression model isn’t zero. 1 By given reliability level of 95% if F coefficient that obtained from regression equation is greater than F-value in Fisher table, it can reject the 0 and vise versa. www.iosrjournals.org 51 | Page The relationship between grow rate of intellectual capital and future profitability of productive V. Analyzing the data Descriptive data Table 2 offered mean and standard deviation data for research variables (intellectual capital growth rate, return on sales , return on equity , return on asset , circulating capital return, company size, and debt ratio). Table 2- Descriptive data for research variables data Abundance mean standard deviation Variable intellectual capital growth rate 97 0/1345 0/2145 return on sales 97 0/1802 0/0479 return on equity 97 0/2411 0/5292 return on asset 97 0/1754 0/1457 circulating capital return 97 0/2547 0/3987 company size 97 23/1547 8/248 debt ratio 97 0/9851 0/1842 Deductive data Results of testing the research hypothesizes by using the simple and separated correlation, simple and multiple regressions are as below. The first ordered hypothesizes for investigating the relation between intellectual capital and future profitability of companies in statistical society of research: Hypothesis 1: There is a significant relation between intellectual capital and next year companies’ return on sales . For testing the first hypothesis, we used the simple correlation model, intellectual capital as independent variable and next year return on sales as dependent variable. In multiple regression equation, the intellectual capital, debt ratio and company size inserted in equation as predictive variables. For controlling the variables, we calculated the partial correlation coefficient. The results of this test offered in table 3. Table 3- Results that obtained by testing the hypothesis 1. The simple partial Model Variables α b β p- value correlation correlation F intellectual -5 1 capital 0/101 6/103*10 0/524 0/001 0/524 0/524 40/431 intellectual capital 6/17*10 -5 0/358 0/001 0/524 0/478 2 0/205 18/753 debt ratio 0/063 0/069 0/001 0/064 0/055 size 0/018 0/071 0/002 0/168 0/062 Based on table 3 in first model, the β value for intellectual capital variable without controlling variables is 0.524 and its p-value is 0.001. Thus, according to significance level of 0.05, this hypothesis is rejected, so the intellectual capital has a significant relation with return on sales rate. In second model, nevertheless two controlling variables of debt ratio and company size with p-value=0.001 and β=0.358 and partial correlation coefficient=0.478, again we see that there is a significant relation between intellectual capital as an independent variable and return on sales rate. Also, the controlling variable of debt ratio (with p-value=0.001 and β=0.069) and company size (with p-value=0.002 and β=0.071) have a significant coefficient. Finally, respect to F, controlling variables, the intellectual capital has a significant effect on return on sales rate. Hypothesis 2: There is a significant relation between intellectual capital and next year companies’ return on equity. For testing the second hypothesis, we used the simple correlation model, intellectual capital as independent variable and next year return on equity as dependent variable. In multiple regression equation, the intellectual capital, debt ratio and company size inserted in equation as predictive variables. For controlling the variables, we calculated the partial correlation coefficient. The results of this test offered in table 4. Table 4- Results that obtained by testing the hypothesis 2. Model Variables α b β p- value The simple partial F www.iosrjournals.org 52 | Page The relationship between grow rate of intellectual capital and future profitability of productive correlation correlation 1 intellectual -4 capital 0/843 7/11*10 0/174 0/004 0/174 0/174 60/339 intellectual 5/82*10 -5 0/039 0/009 0/174 0/112 capital 26/85 2 debt ratio 0/251 0/081 0/009 0/048 0/02 0/009 size 0/035 0/146 0/007 0/171 0/115 Based on table 4 in first model, the β value for intellectual capital variable without controlling variables is 0/174 and its p-value is 0.004. Thus, according to significance level of 0.05, this hypothesis is rejected, so the intellectual capital has a significant relation with return on equity rate. In second model, nevertheless two controlling variables of debt ratio and company size with p-value=0.009 and β=0.039and partial correlation coefficient=0.112, again we see that there is a significant relation between intellectual capital as an independent variable and return on equity rate. Also, the controlling variable of debt ratio (with p-value=0.048 and β=0.009) and company size (with p-value=0.007 and β=0.146) have a significant coefficient. Finally, respect to F, controlling variables, the intellectual capital has a significant effect on return on equity rate. Hypothesis 3: There is a significant relation between intellectual capital and next year companies’ return on asset. For testing the Third hypothesis, we used the simple correlation model, intellectual capital as independent variable and next year return on asset as dependent variable. In multiple regression equation, the intellectual capital, debt ratio and company size inserted in equation as predictive variables. For controlling the variables, we calculated the partial correlation coefficient. The results of this test offered in table 5. Table 5- Results that obtained by testing the hypothesis 3. The simple partial Model Variables α b β p- value correlation correlation F intellectual -7 74/412 1 capital 0/112 5/04*10 0/398 0/003 0/398 0/398 intellectual -7 capital 3/58*10 0/278 0/005 0/398 0/356 2 debt ratio 0/191 35/165 -0/150 -0/174 0/015 -0/161 -0/189 size 0/009 0/076 0/054 0/180 0/058 Based on table 5 in first model, the β value for intellectual capital variable without controlling variables is 0/398 and its p-value is 0.003. Thus, according to significance level of 0.05, this hypothesis is rejected, so the intellectual capital has a significant relation with return on asset rate. In second model, nevertheless two controlling variables of debt ratio and company size with p-value=0.005 and β=0.278and partial correlation coefficient=0.356, again we see that there is a significant relation between intellectual capital as an independent variable and return on asset rate. Also, the controlling variable of debt ratio (with p-value=0.015 and β=0.161) has a significant coefficient and variable of company size (with p-value=0.054 and β=0.076) has not a significant coefficient. Finally, respect to F, controlling variables, the intellectual capital has a significant effect on return on asset rate. Hypothesis 4: There is a significant relation between intellectual capital and next year companies’ circulating capital return. For testing the Fourth hypothesis, we used the simple correlation model, intellectual capital as independent variable and next year circulating capital return as dependent variable. In multiple regression equation, the intellectual capital, debt ratio and company size inserted in equation as predictive variables. For controlling the variables, we calculated the partial correlation coefficient. The results of this test offered in table 6. Table 6- Results that obtained by testing the hypothesis 4. The simple partial Model Variables α b β p- value correlation correlation F intellectual -4 0/085 1 capital 9/248 3/347*10 0/012 0/035 0/012 0/012 intellectual -4 capital 6/95*10 0/080 0/040 0/012 0/008 2 debt ratio 21/547 12/3577 0/085 0/006 0/063 0/071 5/219 size -4/641 -0/243 0/045 -0/164 -0/178 Based on table 6 in first model, the β value for intellectual capital variable without controlling variables is 0/012 and its p-value is 0.035. Thus, according to significance level of 0.05, this hypothesis is rejected, so the www.iosrjournals.org 53 | Page The relationship between grow rate of intellectual capital and future profitability of productive intellectual capital has a significant relation with circulating capital return rate. In second model, nevertheless two controlling variables of debt ratio and company size with p-value=0.040 and β=0.080and partial correlation coefficient=0.008, again we see that there is a significant relation between intellectual capital as an independent variable and circulating capital return rate. Also, the controlling variable of debt ratio (with p-value=0.006 and β=0.085) and company size (with p-value=0.045 and β=-0.243) have a significant coefficient. Finally, respect to F, controlling variables, the intellectual capital has a significant effect on circulating capital return rate. Based on results of hypothesizes test, there is a significant relation between intellectual capital and future profitability of company and four firstly hypothesizes of research is confirmed. The debt ratio as a controlling variable had a significant coefficient in all four hypothesizes but the company size wasn’t significant in third sub-main hypothesis. In the last sub-main hypothesis, there is a similar condition for controlling variable. The second ordered hypothesizes for investigating the relation between intellectual capital growth rate and future profitability of companies in statistical society of research: Hypothesis 5: There is a significant relation between intellectual capital growth rate and next year return on sales of companies. For testing this hypothesis by using the simple correlation model, it considered the intellectual capital growth rate as an independent variable and next year return on sales as a dependent variable. In multiple regression equation, the independent variable of intellectual capital growth rate, the controlling variables of debt ratio and company size included as predicting variables. For controlling the variables, we calculated the partial correlation coefficient. The test results offered in table 7. Table 7- The regression test results for hypothesis 5. The simple partial Model Variables α b β p- value correlation correlation F intellectual 7/457 1 capital 0/185 0/026 0/184 0/001 0/184 0/184 intellectual capital 0/005 0/07 0/004 0/184 0/196 2 debt ratio 0/094 0/112 0/115 0/037 0/095 0/191 12/982 size 0/062 0/051 0/008 0/021 0/059 According to table 7, in first model for intellectual capital growth rate without controlling variables, β=0.184 and p-value=0.001. Thus, respect to significance level of 0.05, the H is rejected. Therefore, intellectual 0 capital growth rate has a significant relation with next year return on sales. In second model due to existence of controlling variables including debt ratio and company size (with p-value=0.004, β=0.07 and partial correlation coefficient=0.196) again we see that there is a significant relation between intellectual capital growth rate and next year return on sales. In addition, the controlling variable of debt ratio (with p-value= 0.037, β=0.115) and company size (with p-value=0.002, β=0.051) have a significant coefficient. Finally, according to F, controlling variables and intellectual capital growth rate, they together have a significant effect on next year return on sales. Hypothesis 6: There is a significant relation between intellectual capital growth rate and next year return on equity of companies. For testing this hypothesis by using the simple correlation model, it considered the intellectual capital growth rate as an independent variable and next year return on equity as a dependent variable. In multiple regression equation, the independent variable of intellectual capital growth rate, the controlling variables of debt ratio and company size included as predicting variables. For controlling the variables, we calculated the partial correlation coefficient. The test results offered in table 8. Table 8- The regression test results for hypothesis 6. The simple partial Model Variables α b β p- value correlation correlation F 1 incapitalual 0/745 0/312 0/658 0/012 0/658 0/658 50/446 intellectual 0/064 0/613 0/009 0/658 0/457 2 capital 0/462 25/487 debt ratio 0/455 0/451 0/030 0/404 0/417 size 0/471 0/412 0/034 0/439 0/486 According to table 8, in first model for intellectual capital growth rate without controlling variables, β=0.658and p-value=0.012. Thus, respect to significance level of 0.05, the H is 0ejected. Therefore, intellectual capital growth rate has a significant relation with next year return on equity. In second model due to existence of www.iosrjournals.org 54 | Page The relationship between grow rate of intellectual capital and future profitability of productive controlling variables including debt ratio and company size (with p-value=0.009, β=0.613 and partial correlation coefficient=0.457) again we see that there is a significant relation between intellectual capital growth rate and next year return on equity. In addition, the controlling variable of debt ratio (with p-value= 0.030, β=0.451) and company size (with p-value=0.034, β=0.412) have a significant coefficient. Finally, according to F, controlling variables and intellectual capital growth rate, they together have a significant effect on next year return on equity. Hypothesis 7: There is a significant relation between intellectual capital growth rate and next year return on asset of companies. For testing this hypothesis by using the simple correlation model, it considered the intellectual capital growth rate as an independent variable and next year return on asset as a dependent variable. In multiple regression equation, the independent variable of intellectual capital growth rate, the controlling variables of debt ratio and company size included as predicting variables. For controlling the variables, we calculated the partial correlation coefficient. The test results offered in table 9. Table 9- The regression test results for hypothesis 7. Model Variables α b β p- value The simple partial F correlation correlation 1 intellectual 0/110 0/016 0/124 0/004 0/124 0/124 15/486 capital intellectual 0/039 0/119 0/005 0/124 0/151 2 capital 0/039 22/147 debt ratio -0/302 -0/267 0/005 -0/185 -0/238 size 0/159 0/451 0/003 0/207 0/405 According to table 9, in first model for intellectual capital growth rate without controlling variables, β=0.124and p-value=0.004. Thus, respect to significance level of 0.05, the H is0rejected. Therefore, intellectual capital growth rate has a significant relation with next year return on asset. In second model due to existence of controlling variables including debt ratio and company size (with p-value=0.005, β=0.119 and partial correlation coefficient=0.151) again we see that there is a significant relation between intellectual capital growth rate and next year return on asset. In addition, the controlling variable of debt ratio (with p-value= 0.005, β=-0.267) and company size (with p-value=0.003, β=0.451) have a significant coefficient. Finally, according to F, controlling variables and intellectual capital growth rate, they together have a significant effect on next year return on asset. Hypothesis 8: There is a significant relation between intellectual capital growth rate and next year circulating capital return of companies. For testing this hypothesis by using the simple correlation model, it considered the intellectual capital growth rate as an independent variable and next year circulating capital return as a dependent variable. In multiple regression equation, the independent variable of intellectual capital growth rate, the controlling variables of debt ratio and company size included as predicting variables. For controlling the variables, we calculated the partial correlation coefficient. The test results offered in table 10. Table 10- The regression test results for hypothesis 8. Model Variables α b β p- value The simple partial F correlation correlation 1 intellectual 0/506 0/157 0/243 0/041 0/243 0/243 38/148 capital intellectual 0/054 0/239 0/018 0/243 0/218 capital 27/658 2 debt ratio 0/473 0/412 0/063 0/011 0/154 0/086 size 0/039 0/015 0/062 0/094 0/079 According to table 10, in first model for intellectual capital growth rate without controlling variables, β=0.243and p-value=0.041. Thus, respect to significance level of 0.05, the H is0rejected. Therefore, intellectual capital growth rate has a significant relation with next year circulating capital return. In second model due to existence of controlling variables including debt ratio and company size (with p-value=0.018, β=0.239 and partial correlation coefficient=0.218) again we see that there is a significant relation between intellectual capital growth rate and next year circulating capital return. In addition, the controlling variable of debt ratio (with p- value= 0.011, β=0.063) and company size (with p-value=0.062, β=0.015) have not a significant coefficient. Finally, according to F, controlling variables and intellectual capital growth rate, they together have a significant effect on next year circulating capital return. www.iosrjournals.org 55 | Page The relationship between grow rate of intellectual capital and future profitability of productive Based on results that obtained by hypothesizes testing, there is a significant relation between intellectual capital growth rate and future profitability of company and therefore, the final four hypothesis of this study is confirmed. The controlling variable of financial leverage had a significant coefficient in all four hypothesizes but company size in last sub-main hypothesis similar to the first main hypothesis, wasn’t seen as a significant controlling variable. VI. Conclusion and suggestions In this research, the obtained results from hypothesizes testing show that there is a direct and significant relation between intellectual capital, intellectual capital growth rate and future profitability of companies in statistical society of research. By these reliable results, again the importance of intellectual capital confirmed and it can claim that intellectual capital has a deterministic power for profitability. Thus, by providing a guideline for enhancing the intellectual capital, managers can have a clear horizon for increasing their profitability. This is the special desire of all managers and beneficiaries for increasing the stockholders’ worth. In previous studies, it showed that there is a positive and significant relation between intellectual capital, current and future performance of company. Also, results that obtained by Zéghal, Anis Maaloul, (2010) show that intellectual capital efficiency has a positive effect on financial performance of company. In Maditinos,D et al study (2011), the relation between intellectual capital and return on equity rate confirmed and this is conforming to our results in present study. The significant relation with current and future financial performance, in internal and external studies is conforming to our results. According to present study results, it is suggested to financial managers that in addition to increasing their knowledge about intellectual capital by reinforcing the intellectual capital elements (human, structural and relational properties), they should develop this context in their organizations, so that by using the competition advantages of intellectual capital, increase the profitability of their companies. Reference [1]. Bontis, N. 2003. Intellecual capital disclosure in Canadian corporation. Journal of Human Resource Costing and Accounting. Vol. 7, No. 1/2, pp. 9-20. [2]. Bontis,N.,Dargonetti,N,C., Jacobsen ,K.and Roos ,G.(1999), “ The knowledge toolbox: A review of the tools available to measure and manage intangible resource ”, European Management Journa،Vol .17No.4 ,pp.391-402 [3]. Chang ,W, Hsieh,J,(2011),” The dynamics of intellectual capital in organizational development” African Journal of Business Management Vol. 5(6), pp.2345-2355. [4]. Edvinsson L, Malone M (1999). Intellectual capitarealizing your company’s true value by finding its hidden roots, Harper Business, New York [5]. Luthy, D. H. (1998). Intellectual Capital and its Measurement. http://www.3bus.osaka-cu.ac. jp/apira98/archives/htms/25.htm [6]. Maditinos,D, Chatzoudes,D, Tsairidis,Ch, Theriou,T,(2011)” The impact of intellectual capital on firms’ market value and financial performance”, Journal of Intellectual Capital Vol. 12 No. 1, 011pp. 132-151. [7]. Shiu, H. (2006). The Application of the Value Added Intellectual Coefficient to Measure Corporate Performance. International Journal of Management, 23 (2), 356-365 [8]. stewart,thomas,(2001) The wealth of knowledge : Intellectual Capital and twenty first century organizationDoubleday and company inc،December. [9]. Vasile, Bogdan (2008) Factors Of The Earning Functions And Their Infiuence On The Intellectual Capital Of An Orga nization, Journal of applied Quantitative methods, Vol.3, No.4. [10]. Zéghal, Anis Maaloul, (2010) "Analysing value added as an indicator of intellectual capital and its consequences on company performance", Journal of Intellectual Capital, Vol. 11 Iss: 1, pp.39 – 60. www.iosrjournals.org 56 | Page

### BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.

### You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

## Why people love StudySoup

#### "Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."

#### "I signed up to be an Elite Notetaker with 2 of my sorority sisters this semester. We just posted our notes weekly and were each making over $600 per month. I LOVE StudySoup!"

#### "There's no way I would have passed my Organic Chemistry class this semester without the notes and study guides I got from StudySoup."

#### "Their 'Elite Notetakers' are making over $1,200/month in sales by creating high quality content that helps their classmates in a time of need."

### Refund Policy

#### STUDYSOUP CANCELLATION POLICY

All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email support@studysoup.com

#### STUDYSOUP REFUND POLICY

StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here: support@studysoup.com

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to support@studysoup.com

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.