The Moderating Role of Managerial and Institutional Ownership on Relation of Intellectual Capital and Firm Performance; An Empirical Analysis of Manufacturing Companies Listed on PSX

This study examines the interaction effect of managerial and institutional ownership on the association between intellectual capital and firm value enhancement. The dependent variable in this study is Tobin’s Q which is measured as (Mkt value per share / Book value per share). Intellectual capital is measured by VAIC using Pulic’s formula. VAIC is constructed through three constituents (Human capital efficiency, Structured capital efficiency, and Capital employed efficiency). Executives and institutional possession are the moderating variables followed by control variables. The results of the study indicated that VAIC positively enhances firm value. Institutional ownership does not affect firm performance and managerial ownership has a negative impact on firm value enhancement. Later the study examines three components impact individually. The HCE and SCE indicated no significant impact on firm performance while CEE indicated positive impact on firm value enhancement. Finally, the study examines the main theme. The analysis of moderating role of managerial and institutional ownership indicated some meaningful results. Managerial ownership negatively moderates the link between firm performance and intellectual capital. Meanwhile, institutional possession illustrated no significant role in influencing the association of VAIC and firm performance. A sample of 200 listed manufacturing companies on Stock Exchange of Pakistan (PSX) was considered for analysis for time period of eight years from 2016-2023.