IJIMT 2017 Vol.8(5): 342-348 ISSN: 2010-0248
doi: 10.18178/ijimt.2017.8.5.751

Information Contents and Mediating Effects of Intellectual Capital and Financial Capital on the Corporate Value Relevance of Business Strategy

Kuoan Tseng, Shuhua Wang, Chingi Lin, and Shihhung Tai
Abstract— This research aims to explore the information contents of business strategy (BS), intellectual capital (IC) and financial capital (FC) on corporate value, the mediating effects of IC and FC on the corporate value relevance of BS, and the moderating effects of quantitative easing (QE) monetary policy. This research combines the knowledge domains of strategy, IC, and finance. The Strategy-Structure-Performance framework and structural equation modeling are utilized to explore the corporate value relevancies as well as the mediating effects. The research subjects are the information technology companies listed in the Taiwan Stock Exchange, and the period covers thirteen years. Hot money flowed into the capital market because of QE, and these subjects are further split into two sub-periods to check whether the corporate value relevance differ between pre-QE and post-QE. The results show that the mediating effects of IC and FC on the corporate value relevance of BS are confirmed, and the information contents and corporate value relevancies of BS, IC, and FC are also demonstrated. The significant differences are observed in the relationship among BS, IC, FC, and corporate value between pre-QE and post-QE. The direct information content of BS on corporate value and the mediating effects of IC and FC, which differ between pre-QE and post-QE, indicate the moderating effects of the QE monetary policy on corporate value relevance, thereby supporting the managerial contingency perspectives. The managerial meanings of these results emphasize the importance of timing, and the related changes in the environment must be considered when formulating industrial policies, conducting strategic management, and performing business valuation.

Index Terms— Information content, mediating effect, intellectual capital, quantitative easing.

Kuoan Tseng is with the Department of Finance, Lunghwa University of Science and Technology, Taiwan (e-mail: andy@mail.lhu.edu.tw). Shuhua Wang is with College of Design, Chung Yuan Christian University, Taiwan. Chingi Lin and Shihhung Tai are with the Department of Industrial Management, Lunghwa University of Science and Technology, Taiwan.

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Cite: Kuoan Tseng, Shuhua Wang, Chingi Lin, and Shihhung Tai, " Information Contents and Mediating Effects of Intellectual Capital and Financial Capital on the Corporate Value Relevance of Business Strategy," International Journal of Innovation, Management and Technology vol. 8, no. 5, pp. 342-348, 2017.

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