Author(s): Shaneeb P and M Sumathy
This paper has examined the impact of intellectual capital (IC) on financial performance of the Indian textile industry by using Public’s Value-added intellectual capital coefficient (VAICTM) model. The study used profitability (ROA), productivity (ATO), and returns on equity (ROE) as the proxies for measuring firm’s financial performance. The study selected the top 81 textiles companies on the basis of market capitalization. The results show that the IC efficiency has a significant and positive relationship with the profitability and Return on equity of the Indian textile industry and inconsequential impact on productivity. Whereas, among the IC components, capital employed efficiency (CEE) is the highly significant component that impact all the indicators of financial performance while human capital efficiency (HCE) only impacts on profitability. The study also found that structural capital efficiency (SCE) has insignificant impact on profitability, productivity, and return on equity of the textile industry in India.