Author(s)

Yiru Yang ¹

Affiliation(s)

¹ Guangzhou College of Commerce, Guangzhou, Guangdong, 511363, China

Corresponding Author

Yiru Yang

ABSTRACT

This paper examines whether equity undervaluation influences the intellectual capital efficiency (ICE) using empirical data collected from Chinese setting. Applying signalling theory as the underlying framework, this study assumes that when firms are undervalued, they are more likely to increase their intellectual capital efficiency (ICE) to signal their superior private information to the market. The sample used in this paper is Chinese listed firms from 2014 to 2021. The findings indicate that equity undervaluation is positively and significantly associated with ICE. This paper also examines the influence of equity undervaluation on four elements of ICE. Among these four elements, undervalued firms increase human capital efficiency the most. The results of this paper provide theoretical and managerial implications. From a theoretical point of view, the results provide more clarity on the effects that the equity undervaluation has on ICE in the context of China. From a managerial point of view, the results are useful for owners and managers of Chinese listed firms where the vision of the components of the analyzed intellectual capital highlights the importance for management to assign attention to the management of intellectual capital since it is clear the effect it has on firm performance.

KEYWORDS

Equity Undervaluation; Human Capital Efficiency; Intellectual Capital; Relational Capital Efficiency; Structural Capital Efficiency

CITE THIS PAPER

Yiru Yang, Equity Undervaluation and Intellectual Capital Efficiency: Evidence from an Emerging Market. Accounting and Corporate Management (2024) Vol. 6: 140-155. DOI: http://dx.doi.org/10.23977/acccm.2024.060218.

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