Human capital indicators, business performance and market‐to‐book ratio
| DOI | https://doi.org/10.1108/14691930510611111 |
| Published date | 01 September 2005 |
| Date | 01 September 2005 |
| Pages | 374-384 |
| Author | Josune Sáenz |
| Subject Matter | Accounting & finance,HR & organizational behaviour,Information & knowledge management |
Human capital indicators,
business performance and
market-to-book ratio
Josune Sa
´enz
Finance and Accounting Department, ESTE School of Management,
University of Deusto, San Sebastia
´n, Spain
Abstract
Purpose – For many authors, the difference between the market value of companies’ shares and their
book value is the consequence of intellectual capital (IC). To test this, this paper suggests a
methodology to study the relationship between IC indicators and the market-to-book ratio (MBR). In
addition, it presents an exploratory application of that methodology in the field of human capital (HC)
and within the Spanish banking industry. In this research, the relationships between HC, MBR and
other business performance indicators are measured.
Design/methodology/approach – The methodology mentioned above creates a score for each of
the three main IC components: human, structural and relational capital. These scores try to measure
the relative position of companies in the same industry in each of the IC blocks. Then, a global score is
set, combining the scores of the previous blocks. For these calculations to be done, a common set of
indicators in the companies studied is needed. The lack of balance nowadays between showing
strategy uniqueness and delivering comparable information across firms, when preparing external IC
reports, has limited the empirical application of the proposed methodology to HC indicators.
Findings – Preliminary results show a clear positive relationship between HC indicators and MBR,
and almost a non existent one between HC indicators and banks’ efficiency and financial return. In any
case, the highest correlations found are between, on the one hand, banks’ efficiency and financial
return and, on the other hand, MBR.
Originality/value – The value of this paper lies mainly in the methodology it provides for external
IC benchmarking
Keywords Intellectualcapital, Human capital, Benchmarking,Business performance, Banking, Spain
Paper type Research paper
Introduction
In the current knowledge-based economy, economists have noticed a growing gap
between the market value of companies’ shares and their book value, above all in the
case of those companies belonging to scientific-technological sectors. Although this
gap has been somewhat reduced over the last few years, it continues to be an extremely
important one.
Major authors such as Brooking (1996), Edvinsson and Malone (1997) and Sveiby
(1997) consider that the origin of this difference lies in those intangible elements
possessed by organizations which fail to be grasped by conventional financial
statements. In particular, special mention should be made in this section of the capacity
of companies to create, transform and capitalize knowledge.
The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at
www.emeraldinsight.com/researchregister www.emeraldinsight.com/1469-1930.htm
The author expresses gratitude to Juan Vianney Go
´mez, for his collaboration in carrying out this
study.
JIC
6,3
374
Journal of Intellectual Capital
Vol. 6 No. 3, 2005
pp. 374-384
qEmerald Group Publishing Limited
1469-1930
DOI 10.1108/14691930510611111
To continue reading
Request your trial