IMPACT OF INTELLECTUAL CAPITAL ON FINANCIAL PERFORMANCE OF CEMENT SECTOR IN PAKISTAN

Abstract

Purpose: Purpose of research to find out the impact of Intellectual Capital on the financial performance of cement sector in Pakistan. The research carried out on cement firm resisted in PSX 100. Methodology & Design:The research follows a quantitative research methodology however; the data for 7 years have been carried out to determine the impact. The data for this study has been collected from secondary sources i.e. financial statements of the companies.. The data analysis has been conducted through E-views software. Findings: The findings from the research show that, there has been a significant impact of IC on the financial performance ofthe firms in Cement sector. The findings from E-views test identifies that, 35% of the variation in ROE is explained by the research model. The findings also suggest that, IC component HCE and CEE has significant impact on the firm’s ROE while SCE a component of IC has no significant impact on ROE. Limitations: The limitations for this research includes, time constraints, Limited scope of work and Limited sample size. Recommendations: There should be a separate department with the name of IC department in public as well as in private organizations, which keep clear and proper records of IC and its components in organization. Also policy makers and standard makers should include IC and its components in harmonized International Financial Reporting Standard (IFRS) and local GAAP due toits significance in business organizations, besides this it is becoming need of it to introduce it in modem syllabus for the higher education to keep accountants up to date about its significance and importance. In Pakistan all three tires of government (federal, provincial and local) should invest more in intangible assets than the investing in the traditional factors of productions.