Title: AN EMPIRICAL STUDY OF VALUE-ADDED EFFICIENCY IN INDIAN IT SOFTWARE AND PRIVATE BANKING SECTORS
Authors:
Shireen Rosario and CA Reginald Rosario
Abstract:
Studies have shown that in the twenty-first century, the business world is more driven by Intellectual Capital than by Physical Capital. Over the years, various methods have been adopted to measure the intellectual capital of an enterprise. Of these, the Value-Added Intellectual Coefficient (VAIC) method developed by Prof. Ante Public is widely accepted and used. This study concentrates on analyzing the elements of VAIC in the IT Software industry and drawing a comparison between the VAIC of IT and Banking industries. The study points out that HCE are the largest contributor to the VAIC of the IT industry, followed by Capital Employed Efficiency (CEE). However, the CEE being next to HCE demonstrates that a big portion of value-added efficiency in the IT sector comes from the efficiency of capital employed, apart from the investment in human resources. The study also shows that Market capitalization, Net profits, and VAIC need not go hand in hand. The comparison between the IT and Banking industries shows that the VAIC is higher in the Banking industry, which is influenced by the higher HCE. However, when it comes to CEE the IT sector scores above the Banking Industry. VAIC for 2022 of all companies examined is higher than the threshold limit of 2.5 prescribed by Ante Public, exhibiting a high level of efficiency and success.
Keywords: VAIC, IT, Banking, Intellectual Capital, HCE, JEL Classification: G200, G210, O150
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