Impact of Intellectual Capital on Shareholders Value: A Study on Indian Traditional Companies

In the knowledge economy Intangible assets or Intellectual capital play vital role for the creation and maximization of shareholders value of Knowledge Intensive Companies, where knowledge assets are primary assets. However, the performance of non- Knowledge Intensive Companies is directly or indirectly influenced by the intangible or invisible assets. In this study an attempt is made to find out the effects of those assets in shareholders value creation of non- Knowledge Intensive Companies. For the purpose of this study data are collected from 50 Indian Traditional companies which are tangible assets based and listed in BSE or NSE for the period 2011 to 2015. In this study Tobin's Q and ROE ratio are used to measure the shareholders value of sample companies. ROA of sample companies are also used to measure profitability of businesses. Value creation efficiency of intellectual capital is measured by Pulic's VAICTM model. Multiple regression analysis is used to analyze the data. From the empirical results it is clear that physical capital of Indian non-knowledge intensive companies plays a significant role towards shareholders value creation.