The Impact of Intellectual Capital on Firm Value and The Mediating Effect of Financial Performance of Banking Sector in Sri Lanka.

Abstract

This study attempts to identify the effect of Intellectual Capital on firm value with the mediating effect of Financial performance, with special reference to the banking sector in Sri Lanka. Primary data was gathered by using a wellstructured questionnaire to achieve this goal. Managers and executives at banks listed on the Colombo Stock Exchange were the source of 306 responses. The study adopted the mediation analysis from the methodology proposed by Baron & Kenny in 1986. Based on the primary data analysis, the findings show a strong positive impact of human and customer capital on the financial performance and firm value of listed banks. Further findings suggested the complementary partial mediation role of financial performance in the association between intellectual capital and the firm value of banks. The present investigation will be crucial in determining the empirical knowledge regarding the impact of intellectual capital on the firm value mediated by the financial performance of listed banks in the Colombo Stock Exchange.