The role of diversification on the relationship between intelectual capital disclosure and firm value

Fathyah Hashim, Romlah Jaffar, Mohamat Sabri Hassan, Zaleha Abdul Shukor

Research output: Contribution to journalArticle

Abstract

This study examines the influence of diversification on the relationship between intellectual capital disclosure (overall intellectual capital, internal capital, external capital and human capital disclosure) and firm value of 233 firms that are listed on the Main Board of Bursa Malaysia on 31 December 2007. Previous studies provide evidence of a positive relationship between intellectual capital disclosure and firm value. Previous studies also indicate that diversified firms which are perceived to be more capable to develop and invest in intellectual capital are more likely to make voluntary disclosures. However, empirical evidences on the effect of diversification on firm value are inconsistent with the theory. Results of multiple regressions indicate that there is a positive and significant relationship between intellectual capital disclosure and firm value. The result of the study also indicates that diversification has a significant influence on the relationship between intellectual capital disclosure and firm value. The relationship is stronger for high diversification firms. This result suggests that diversification can moderate the relationship between intellectual capital disclosure and firm value. Further, this study indicates that firms that are highly diversified and provide high level of external capital disclosure will show the stronger relationship between external capital disclosure and firm value. This indicates that managers of highly diversified firms should emphasize on the importance of external intellectual capital disclosure so that the firm value will not be undervalued.

Original languageEnglish
Pages (from-to)43-55
Number of pages13
JournalJurnal Pengurusan
Volume35
Publication statusPublished - Sep 2012

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Diversification
Firm value
Disclosure
Intellectual capital
Diversified firms
Malaysia
Multiple regression
Firm diversification
Voluntary disclosure
Human capital
Empirical evidence
Managers

ASJC Scopus subject areas

  • Business, Management and Accounting (miscellaneous)
  • Accounting
  • Business and International Management

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The role of diversification on the relationship between intelectual capital disclosure and firm value. / Hashim, Fathyah; Jaffar, Romlah; Hassan, Mohamat Sabri; Abdul Shukor, Zaleha.

In: Jurnal Pengurusan, Vol. 35, 09.2012, p. 43-55.

Research output: Contribution to journalArticle

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