| Author: | Chan, Chi Wing |
| Title: | Development of an enhanced VAIC (en-VAIC) method for analysing intellectual capital and company performance in the property development and investment industry |
| Advisors: | Cheung, C. F. Benny (ISE) Lee, W. B. (ISE) |
| Degree: | Eng.D. |
| Year: | 2022 |
| Subject: | Intellectual capital Organizational effectiveness Knowledge management Hong Kong Polytechnic University -- Dissertations |
| Department: | Department of Industrial and Systems Engineering |
| Pages: | 296 pages : color illustrations |
| Language: | English |
| Abstract: | The increasing focus of knowledge level in the regional economy and business operation are driving the growth of knowledge economy. In Hong Kong, the economy is significantly contributed to by knowledge workers. In China, the growth of knowledge-intensive companies and increment of intellectual proportion in companies is significant. Nowadays, the intellectual input to business operation is important to the company performance. The contribution of intangible assets on the companies' valuation in the stock market is increasing. The phenomenon indicates the valuation of intellectual capital has been accepted by the company owners and management, investors and the business industries. The market valuation of the Property and Construction industry ranked second highest in the Hong Kong stock market between the period of 2014 and 2018. The companies in the property development sub-sector and property investment sub-sector consists of property business operation primarily in two regions, which are China and Hong Kong SAR. The key focus of property development companies is to take part in the real estate market and provide continuous development, including the design, construct and supply of properties. On the other hand, the focus of property investment companies is to obtain revenue from their investment properties. Their sources of income mainly from the investment on physical properties. The costs for property development activities and property investment are primarily from the acquisition of land and existing real estate properties, design and construction of buildings, customer service and property management. During the planning, design, construction and operation process, there are significant intellectual inputs are required. Nevertheless, the values and contributions of intellectual capital are often overlooked. This research objective is to investigate whether intellectual capital (IC) and its related efficiency indicators have an impact on the company performance in the financial perspective. Many existing IC evaluation models are either qualitative or over-simplified in nature, or without consideration of industry characteristic. In this research study, the enhanced value added intellectual coefficient (en-VAIC) model is purposely developed based on the Skandia Value Framework and the classic Value Added Intellectual Coefficient (VAIC) framework, whilst further enhanced with industry-specific elements. This proposed en-VAIC framework provides an important means to develop a model generation mechanism for analysing the relationship between company IC performance and company financial performance. This study covers the representative companies that embrace most of the activities throughout the building life cycle, which are the companies that operate property development and property investment business. The selected thirty-one sample companies from the property development sector and property investment (PDPI) sector are all listed in the Hong Kong stock market. The companies' total market value are exceeding 75% of the total market capitalization of the two sectors. The company financial data and market valuation data for the 5-year period, from 2014 to 2018 or 2014/15 to 2018/19, are obtained for the construction and testing of regression models. The statistically significant models are validated by the actual company financial data and market valuation data of the year 2019 or 2019/20. The predictabilities of the regression models are determined. The results from these empirical studies revealed that intellectual capital possess positive and significant impacts on company financial performance and its market valuation in the property development sub-sector, but appears to have no significant impacts on the company performance in the property investment sub-sector. In the case of combined PDPI sub-sectors, intellectual capital possess positive and significant impacts on company performance, in terms of profitability indicators, productivity indicator and market value to book value ratio. There are diversified impacts of the selected control variables on the company performance. The model validation exercise revealed that many regression models possess good predictability. This is the first known comprehensive research study on the relationship between company IC and financial performance, that focus on the Hong Kong listed PDPI companies. The results demonstrated the predictability and applicability of these enhanced models. The model generation mechanism of the proposed en-VAIC method is scalable for use by other sectors in the property and construction industry, or other business sectors. This study also uncovered the deficiencies in the listed companies' current financial reporting practices that hinder further IC evaluation. On the other hand, the regression models developed from this study can provide a quantitative overview on the relationship between company performance and various indicators relating to intellectual capital, intangible asset, inventory, liquidity and solvency. The fitted formulas generated in this study will be useful for the company owners and senior management, investors and stakeholders. |
| Rights: | All rights reserved |
| Access: | restricted access |
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| File | Description | Size | Format | |
|---|---|---|---|---|
| 6342.pdf | For All Users (off-campus access for PolyU Staff & Students only) | 5.75 MB | Adobe PDF | View/Open |
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