پژوهشهای مدیریت عمومی (May 2019)
The Effect of Intellectual Capital Efficiency and Informational Transparency on Cost of Equity Owners
Abstract
Abstract The role of financial information transparency of companies and efficiency of intellectual capital has been more important in recent years. Non-transparent financial information along with reducing informational quality lead to increasing information risk, lack of confidence in investors, reducing liquidity and increasing cost of equity owners. On the other hand, inefficiency of intellectual capital through various channels such as reduction of knowledge-based producti on will lead to reducing the value of the company and increasing cost of equity owners. In this paper, in order to provide empirical evidences about impact of informational transparency and efficiency of intellectual capital on the rights of shareholders’ costs of companies, financial information of 93 accepted companies in the years 2008 to 2016 in the TSE has been studied using the combined data and random-effects model. Findings of the research indicate that the efficiency of intellectual capital, human and physical capitals have relationship with the cost of equity owners. However, there is no relationship between the variables of informational transparency and efficiency of structural capital with cost of equity owners. So, the role of the efficiency of intellectual capital, human and physical capitals for decreasing the cost of equity owners in management and investment decisions should not be ignored. Introduction Capital cost is one of the basic concepts in the field of financial literature. The cost of capital plays an important role in financing decisions. Management of the company in order to determine the financial resources, should determine the cost of financing and factors affecting it. Increasing information transparency and intellectual capital efficiency are among the factors influencing the reduction of equity costs. As non-transparent financial information reduces the quality of information, it leads to increased information risk, investors' distrust, lower liquidity, and rising costs for equity holders. On the other hand, the inefficiency of intellectual capital through various channels, such as the reduction of knowledge-based production, will lead to a devaluation of the company and an increase in the cost of the owners' equity. The purpose of this study is to investigate whether information transparency and the efficiency of intellectual capital affect the cost of shareholders' equity of listed companies in Tehran Stock Exchange. Materials and Methods In this study, a systematic deletion method has been used to determine the statistical sample. Also, in order to investigate the effect of information transparency and intellectual capital efficiency on equity costs, a multivariate regression model with panel data and a randomized model estimation method have been used. To measure the efficiency of intellectual capital, we use the value-added coefficient of intellectual capital proposed by PALIC. Also, Gordon's model has been selected to calculate the cost of equity. Discussion and Results The results of model estimation show that there is no relationship between information transparency variable(P = 0.3333) and structural capital efficiency(P = 0.430) with cost of owners' equity, and also the relationship between the efficiency of intellectual capital(P = 0.0181), Human capital(P = 0.0077) and physical capital(P = 0.0053) at the cost of equity at a 99% confidence level. On the other hand, given the sign of the coefficients of variables, while the relationship between the efficiency of intellectual and human capital with the cost of equity is positive, this relationship is in the relationship between the efficiency of physical capital and the cost of equity reversal. In other words, only increasing the efficiency of physical capital would lead to a reduction in the cost of equity in Iran. These results indicate the inefficiency of intellectual capital and its components in relation to physical capital. Conclusion The results show that the efficiency of intellectual capital, human capital and physical capital is related to the cost of equity, but there is no relationship between the variables of information transparency and the efficiency of structural capital with the cost of equity. Also, with respect to the variable of coefficients, only increasing the efficiency of physical capital leads to a reduction in the cost of equity in the target companies. Considering the user structure of the Iranian economy, increasing the efficiency of physical capital is effective in reducing the cost of equity. The inefficiency of human capital in lowering the cost of equity is indicative of more employability than skilled labor and the inefficiency of intellectual capital existing in these companies. Therefore, in order to reduce the cost of shareholders' equity, managers, suppliers of corporate finance and investors, they should consider the relationship of these variables in making investment decisions and management decisions with more consideration.
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