The Influence Of Intellectual Capital On The Intrinsic Value Of The Company With Financial Performance As An Intervening Variable In Banking Companies In Indonesia

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The Influence of Intellectual Capital on the Intrinsic Value of the Company with Financial Performance as an Intervening Variable in Banking Companies in Indonesia

Introduction

In today's fast-paced business environment, companies are constantly seeking ways to increase their value and stay ahead of the competition. One key aspect of a company's value is its intrinsic value, which is the overall value of the current net cash flow. The difference between book value and market value or intrinsic value indicates the presence of "hidden value" derived from intellectual capital assets. This study aims to explore the influence of intellectual capital and financial performance on the intrinsic value of banking companies in Indonesia, with a focus on the role of financial performance as intervening variables.

The Importance of Intellectual Capital

Intellectual capital refers to the knowledge, skills, and expertise that a company possesses, which can be used to create value for the company. It is a key driver of a company's success and can be a major source of competitive advantage. In the context of banking companies, intellectual capital can take many forms, including the skills and expertise of employees, the knowledge and experience of management, and the company's ability to innovate and adapt to changing market conditions.

The Role of Financial Performance

Financial performance is a critical aspect of a company's success, as it reflects the company's ability to generate profits and create value for shareholders. In the context of this study, financial performance is seen as an intervening variable, which means that it plays a key role in connecting intellectual capital with intrinsic value. By examining the relationship between intellectual capital and financial performance, this study aims to provide insights into how banking companies can use intellectual capital to improve their financial performance and ultimately increase their intrinsic value.

Methodology

This study took the population of all banking companies listed on the Indonesia Stock Exchange in 2012 as a sample. Path analysis was used to reveal the relationship between variables. Of the various components forming VaICTM, only "Capital Employed" (VACA) has a positive and significant influence on the company's financial performance.

Results

The results of this study showed that intellectual capital had a positive and significant influence on financial performance. Financial performance, in turn, also has a positive and significant influence on the intrinsic value of the company. Although Intellectual Capital has no direct effect on intrinsic values, there is an indirect effect through financial performance as an intervening variable.

Deeper Analysis

The Role of "Capital Employee"

Vaca's positive influence on financial performance shows that an effective banking company utilizes resources (both own capital and loan) to generate profits, will have a positive impact on its intrinsic value. This suggests that banking companies that are able to effectively utilize their resources will be able to improve their financial performance and ultimately increase their intrinsic value.

Financial Performance as a Liaison

Financial performance acts as a bridge between intellectual capital and intrinsic value. This shows that increasing intellectual capital must be accompanied by the right strategy to improve financial performance, so that it can have a positive impact on the company's intrinsic value. This suggests that banking companies need to focus on developing a strategy that will improve their financial performance, in order to increase their intrinsic value.

Challenges for Banking

This research provides important insights for banking companies in understanding the role of intellectual capital in the creation of values. Companies need to focus on building and developing intellectual capital, especially "capital employees", in order to improve financial performance and intrinsic values.

Recommendation

  • Banking companies need to focus on building and developing intellectual capital, specifically "Capital Employed", to improve financial performance and intrinsic values.
  • Increased intellectual capital must be accompanied by the right strategy to improve financial performance.
  • Further research is needed to examine the effect of other intellectual capital components on the intrinsic value of banking companies in Indonesia.

Conclusion

This study proves that Intellectual Capital plays an important role in building the intrinsic value of banking companies in Indonesia. Financial performance as an intervening variable is the key in connecting intellectual capital with intrinsic values. Banking companies that are able to use intellectual capital optimally, will have the potential to improve their financial performance and intrinsic values in the future.

Implications for Practice

This study has several implications for practice. Firstly, it highlights the importance of intellectual capital in building the intrinsic value of banking companies in Indonesia. Secondly, it suggests that financial performance is a critical aspect of a company's success, and that banking companies need to focus on developing a strategy that will improve their financial performance. Finally, it suggests that banking companies need to focus on building and developing intellectual capital, especially "capital employees", in order to improve financial performance and intrinsic values.

Limitations of the Study

This study has several limitations. Firstly, it only examined the population of all banking companies listed on the Indonesia Stock Exchange in 2012, which may not be representative of all banking companies in Indonesia. Secondly, it only examined the relationship between intellectual capital and financial performance, and did not examine the relationship between intellectual capital and other aspects of a company's value. Finally, it only examined the effect of intellectual capital on intrinsic value, and did not examine the effect of other factors on intrinsic value.

Future Research Directions

This study suggests several future research directions. Firstly, it suggests that further research is needed to examine the effect of other intellectual capital components on the intrinsic value of banking companies in Indonesia. Secondly, it suggests that further research is needed to examine the relationship between intellectual capital and other aspects of a company's value, such as market value and book value. Finally, it suggests that further research is needed to examine the effect of other factors on intrinsic value, such as industry and company size.
Frequently Asked Questions (FAQs) about the Influence of Intellectual Capital on the Intrinsic Value of Banking Companies in Indonesia

Q: What is intellectual capital, and how does it relate to a company's value?

A: Intellectual capital refers to the knowledge, skills, and expertise that a company possesses, which can be used to create value for the company. It is a key driver of a company's success and can be a major source of competitive advantage. In the context of this study, intellectual capital is seen as a key factor in building the intrinsic value of banking companies in Indonesia.

Q: What is intrinsic value, and how is it different from book value and market value?

A: Intrinsic value is the overall value of the current net cash flow. It is different from book value, which is the value of a company's assets and liabilities as recorded on its balance sheet. It is also different from market value, which is the value of a company's shares as traded on the stock market. Intrinsic value is a more comprehensive measure of a company's value, as it takes into account the company's ability to generate cash flows in the future.

Q: How does financial performance relate to intellectual capital and intrinsic value?

A: Financial performance is seen as an intervening variable, which means that it plays a key role in connecting intellectual capital with intrinsic value. By examining the relationship between intellectual capital and financial performance, this study aims to provide insights into how banking companies can use intellectual capital to improve their financial performance and ultimately increase their intrinsic value.

Q: What is the role of "capital employee" in building the intrinsic value of banking companies in Indonesia?

A: Vaca's positive influence on financial performance shows that an effective banking company utilizes resources (both own capital and loan) to generate profits, will have a positive impact on its intrinsic value. This suggests that banking companies that are able to effectively utilize their resources will be able to improve their financial performance and ultimately increase their intrinsic value.

Q: What are the implications of this study for banking companies in Indonesia?

A: This study highlights the importance of intellectual capital in building the intrinsic value of banking companies in Indonesia. It suggests that banking companies need to focus on building and developing intellectual capital, especially "capital employees", in order to improve financial performance and intrinsic values. It also suggests that banking companies need to develop a strategy that will improve their financial performance, in order to increase their intrinsic value.

Q: What are the limitations of this study?

A: This study has several limitations. Firstly, it only examined the population of all banking companies listed on the Indonesia Stock Exchange in 2012, which may not be representative of all banking companies in Indonesia. Secondly, it only examined the relationship between intellectual capital and financial performance, and did not examine the relationship between intellectual capital and other aspects of a company's value. Finally, it only examined the effect of intellectual capital on intrinsic value, and did not examine the effect of other factors on intrinsic value.

Q: What are the future research directions suggested by this study?

A: This study suggests several future research directions. Firstly, it suggests that further research is needed to examine the effect of other intellectual capital components on the intrinsic value of banking companies in Indonesia. Secondly, it suggests that further research is needed to examine the relationship between intellectual capital and other aspects of a company's value, such as market value and book value. Finally, it suggests that further research is needed to examine the effect of other factors on intrinsic value, such as industry and company size.

Q: How can banking companies in Indonesia use the findings of this study to improve their financial performance and intrinsic value?

A: Banking companies in Indonesia can use the findings of this study to improve their financial performance and intrinsic value by focusing on building and developing intellectual capital, especially "capital employees". They can also develop a strategy that will improve their financial performance, in order to increase their intrinsic value. Additionally, they can examine the relationship between intellectual capital and other aspects of their value, such as market value and book value, in order to gain a more comprehensive understanding of their value.