Financial Reporting of Intellectual Capital and Company’s Performance in Indian Information Technology Industry

Financial Reporting of Intellectual Capital and Company’s Performance in Indian Information Technology Industry

Karam Pal (Guru Jambheshwar University of Science & Technology, India) and Sushila Soriya (Guru Jambheshwar University of Science & Technology, India)
DOI: 10.4018/jabim.2011040103
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Abstract

This paper examines the relationship between Financial Reporting of Intellectual Capital and Company’s Performances in Indian Information Technology Industry. For the purpose of this study, sixty companies listed on NSE were taken for a period of 1999-00 to 2008-09. Value Added Intellectual Co-efficient (VAICTM) method developed by Pulic (1998) was used for the analysis of the data. The present study uses VAICTM model and regression equation for the evaluation of intellectual capital and their relationship with productivity, profitability, and market valuation of the companies. The result of the study supports the hypothesis that profitability of the company can be explained by the intellectual capital. However, there is no significant association of intellectual capital with productivity and market capitalization of the companies for the selected time period of year 1999-00 to 2008-09.
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1. An Overview Of Indian It Industry

Information technology industry is one of the growing sectors in India making its presence well felt all over the world. The IT industry sector is one of the many knowledge based industries. The growth of the IT industry may be due to the presence of intellectual capital in it. Table 1 shows industry size of IT and IT enables services (ITES) from the year 2007 to 2012 with compound annual growth rate (CAGR).

Table 1.
India IT/ITES Industry Size (2007-2012)
(value in Crores)
200720082009201020112012CAGR
07-12
Domestic IT/ITES
Market
90,014110,177133,100158,053182,991209,69818.4%
IT/ITES
Export Revenue
156,594186,142218,104250,087284,666320,27815.4%
India IT/ITES
Industry Size
246,609296,319315,207408,139467,657529,97616.5%

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