A Study of the Relationship between Intellectual Capital and Shareholders’ Value

The purpose of this study is to explore the relationship between Intellectual capital and shareholders’ Value in 50 Malaysian firms during the years 2000 and 2012. Intellectual capital is considered as an independent variable, which divided to human, relational and structural capital. Operating revenues have been used to form the proxy of human and relational capital and value added concept has used to measure the structural capital. Shareholders’ Value has considered as dependent variable that represents the present value of long-term free cash flows. Factors, which have affected on shareholder value, are including Profitability, capital efficiency, growth and cost of equity. Firm's size and debt to equity ratio are considered as control variable and their effect have been analyzed on the shareholders’ Value. The methods of multiple regressions have been used to predict the impact of intellectual capital and shareholder value. The finding of this study shows that there is a positive relation between intellectual capital and shareholder value; it also indicates that the effect of firm size on shareholder value is positive but this relation for debt to equity ratio is negative.