Abstract:
Purpose-The purpose of this paper is to examine the impact of intellectual capital onfinancial performance of companies listed in Colombo Stock Exchange (CSE)'Design/metho dolory/aPProach- This study calculates the intellectual capital using Value Added Intellectualcapital coefficient method which analyses the intellectual capital using value AddedHuman capital coefficient (VAHU), Value Added structurai capital coefficient(SAVA), and vaiue-Added capital Employed coefficient (VACA)' The dependentvariable, the financiai performance of the companies under this evaluation' is proxiedbynetum on Assets (ROA), Assets Turnover Ratio (ATR) and Market to Book value(lvB). The study was conducted among companies reporting value added reports in itsannual reports and thus 20 companies were observed for five year periods from 2014to 2018. The data were collected from annual reports publicly published by thecompanies under the study. The data ata\yzedusing descriptive statistics, correlationand regression anaiYsis.Findings- The results indicate that the relationships between the performance of acompany's intellectual capitai and performance indicators are varied' The findingssuggest that intellectual capital explains profitability, productivity and market valuationin Sri Lanka. It is also found that physical capital represented by value added capitalemployed was the one which significantly impact on many independent variablesstudied. The overall conclusion is that the intellectual capital significantly explains thefinancial performance of listed firms'originality /value- This is one of the few studies on intellectual capital of Sri Lankanfimrs. The present study provides a new aspect of the relationship between intellectualcapital and firm Performance.