The relationship between corporate performance and intellectual capital pre-and post-the adoption of IFRS: Empirical study based on UK listed companies

Abstract

This research seeks to examine the relationship between firm performance and intellectual capital experimentally. The study sample consists of companies listed on the London Stock Exchange between 2003 and 2007. After the data was evaluated, it was noted that a more significant part of a company's value is generated by its human capital as opposed to their physical assets; thus, intellectual capital positively affects corporate performance. The transition of the London Stock Exchange to IFRS in 2005 is also seen as a change that could have affected the extent of the relationship. Therefore, by considering the adoption of IFRS, the result determined that the implementation of IFRS has resulted in firms improving their performance. Likewise, the relationship between intellectual capital and company performance improved after the adoption of IFRS in contrast to the pre-adoption period.