Investigation of intellectual capital and firm performance in Thailand: Mediating role of earnings quality

Abstract

This study was conducted to investigate two main aspects. First, it seeks to analyze how intellectual capital impacts firm performance. Second, it examines how intellectual capital impacts firm performance through earnings quality. To achieve these objectives, 114 financial datasets from service businesses listed on the Stock Exchange of Thailand (SET) during the period from 2019 to 2020 were utilized. The hypotheses were tested through various analytical techniques, including descriptive statistics, normality tests, a correlation matrix, structural equation models, and path analysis. The findings revealed that earnings quality indirectly impacted firm performance, as assessed by Tobin's Q and return on assets. The study demonstrated that earnings quality, measured through discretionary accruals, served as a partial mediator between intellectual capital and return on assets. Furthermore, earnings quality was identified as a full mediator in the association between intellectual capital and Tobin's Q. After analyzing the data during the COVID-19 pandemic, it was found that businesses that utilized information technology systems and employed efficient distribution channels demonstrated high relational capital efficiency (RCE). This efficiency positively affected market value. The practical contribution of this study provides managers with measurement methods for intellectual capital development, enabling them to enhance operational efficiency in intellectual capital and generate high earnings quality that reflects market value. Additionally, it highlights the importance of adapting to digital-era economic changes. Regulatory bodies can further promote and support intellectual capital to increase market value.