Does intellectual capital predict future stock returns? An Indian perspective

What is it about?

This study investigates the relationship between intellectual capital (measured using VAIC) and subsequent stock returns in India over a 22-year period (2000–2021), focusing on non-financial firms. The findings reveal a negative relationship between intellectual capital and future stock returns, with Indian firms continuing to rely more on physical and financial capital than on human or structural capital. Industry heterogeneity was observed, and a sub-period analysis indicated a slight positive but insignificant relationship in recent years. Additionally, younger and smaller firms with low VAIC were found to be more significant predictors of stock returns. This research contributes to understanding the underexplored link between intellectual capital and stock returns, emphasizing the importance of physical capital in return predictions.

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