The Effect of Intellectual Capital on Firm Value Through Financial Performance in Indonesian Banks

Abstract

Intellectual capital has become a strategic resource for banking companies in enhancing  competitiveness and creating firm value. However, previous studies have reported inconsistent  findings regarding the relationships among intellectual capital, financial performance, and firm value.  This study aims to examine the effect of intellectual capital on firm value with financial performance  as a mediating variable in banking companies listed on the Indonesia Stock Exchange in 2024.  Intellectual capital was measured using the Value Added Intellectual Coefficient (VAIC), financial  performance was proxied by Return on Assets (ROA) and Return on Equity (ROE), while firm value  was measured using Price to Book Value (PBV) and Tobin's Q. This study employed a quantitative  approach using secondary data from annual reports and financial statements. Data were analyzed  using path analysis with IBM SPSS Statistics. After outlier elimination, the final sample consisted of  33 banking companies. The results indicate that intellectual capital positively and significantly affects  ROA (β = 0.786, p < 0.001), ROE (β = 0.678, p < 0.001), PBV (β = 0.534, p = 0.008), and Tobin's Q (β =  0.826, p < 0.001). However, ROA and ROE do not significantly affect PBV or Tobin's Q (p > 0.05);  therefore, financial performance does not mediate the relationship between intellectual capital and  firm value. These findings suggest that investors value intellectual capital directly rather than  through improvements in accounting-based financial performance. This study provides empirical  evidence on the role of intellectual capital in enhancing firm value in Indonesia's banking industry.