Look for people, not for alpha: mutual funds success and managers intellectual capital
Purpose. This paper explores whether individual intellectual capital of a fund manager allows mutual fund to outperform market.
Design/methodology/approach The sample includes 85 Russian equity funds for the period of 2013. Firstly Jensen’s alpha for each fund has been calculated and then cross-sectional regression analysis has been used. While only a part of fund managers publish biographic sketches the authors use Heckman procedure to control for self-selection issues.
Findings. The results support the idea that the individual characteristics indicate the possibility to earn abnormal alpha. Managers with economic education and with Moscow education perform better than others. Relationship between both fund performance measures and manager’s experience has inverted U-shape. Jensen’s alpha reaches its highest level at the point of 9 years, whereas beta – at 10 years of manager’s experience.
Research limitations/implications. Investigation can be improved by including more variables that influence the disclosure of managers’ personal information, for example, by conducting surveys. Additionally, cross-sectional data restrict the analysis.
Practical implications. The discovered characteristics of managers' intellectual capital can be used as additional screening tool for the investor who is deciding on mutual fund choice in Russia. While individual intellectual capital is observable and more persistent in time in comparison with the past fund performance such tool allows better decision-making.
Originality/value. This is the first paper that explores which characteristics of Russian fund managers are connected with higher abnormal return (measured by Jensen’s alpha) and risk (beta) of mutual funds.
According to the framework of knowledge economy, production and management of knowledge are key aspects of firm’s activity nowadays. Intellectual capital (IC) is the crucial factor for company survival in the market. Therefore it is vital to realize the way that this capital helps to create firm value. The purpose of this study is to test empirically one aspect of the relationship between intellectual capital components and business performance – the influence of intellectual capital structure on process of firm’s value added creation.
In order to analyze the process of intellectual capital transformation into the company value, the balanced panel data were collected. The sample consists of 64 British firms in 6 industries: retail and wholesale trade, machinery manufacture, chemicals manufacture, transport and telecommunications, oil extraction and producing. The panel includes five years: from 2005 to 2009. In order to obtain comprehensive data of chosen companies we used Amadeus Database (Bureau Van Dijk) as like as information from companies’ websites.
As far as there is no singular method of measuring value added by intellectual capital, we used five the most common methods: EVATM, MVATM, FGVTM, VAICTM, P/B ratio. We also used 14 variables as proxies for intellectual capital components.
The models are estimated with pooled cross-sectional OLS method.
Most strongly influence of the intellectual assets structure is reflected in VAIC and FGV. At the same time, EVA and P/B ratio have weak or not significant relationship with the structure of the intellectual assets portfolio.
It should also be noted that models with human capital proxy in the denominator show a significant positive dependency between a ratio of the intellectual capital components and value added.
Moreover consideration of the industry factor changes the results only slightly.
The present study advances our understanding of how to manage knowledge-related resources and contributes to effective investment management. The results confirm that structure of intellectual assets has quite stable linear effect on the value added created by the company. The effect is observed both in the short and long term period. Consequently, management should consider not only an accumulated volume of intellectual capital, but also the ratio between these components in order to increase company value.
Current article is dedicated to the relationship between effectiveness of usage of intellectual capital and capital structure of firms in Russia in 2005-2007. Current research showed that effectiveness of usage of intellectual capital of firms has a positive influence over the level of financial leverage. The result of the research has showed that the more effective usage of intellectual capital makes a company more attractive for the credit organizations and opens more sources to obtain financing. There were also revealed some specific features of relationship between the effectiveness of utilization of intellectual capital and corporate financial decisions in Russia. The result is consistent with the results from the similar researches from the developed markets.
The purpose of this research is to develop cost-effectiveness tools for the analysis of company’s intellectual resources, in terms of resource-based and value-based approaches. Our study focuses on the evaluation of intellectual capital methods to discover the drivers of company growth. We suppose that the potential effectiveness of intellectual capital resources varies according to different institutional factors. Several statistical methods will be used for the empirical issues in this research, including common cross-sectional and panel data analysis, and the instrumental variables method. The database collected for this purpose will consist of financial and economic indicators underlying the intellectual capital evaluation, such as strategic performance indicators (EVA© and FGV©).The dataset includes companies from different countries and industries according to the Knowledge Economy Index of the World Bank. The industries presented in the dataset are selected according to the predominance of several intellectual capital elements. The database includes financial services, wholesale and retail trade, machinery and equipment manufacture, the chemical industry, and transport and communications. As a result of the empirical research, we expect to answer the following questions:Is there a close relationship betweenintellectual capital quality and company performance? What are the external and internalfactors affecting this relationship? (country, industry, company size, market dynamics, etc.)
These proceedings represent the work of researchers participating in the 11th International Conference on Intellectual Capital, Knowledge Management & Organisational Learning – ICICKM 2014, which this year is being held at The University of Sydney Business School, The University of Sydney, Australia. The Conference Co‐Chairs are Dr John Dumay from Macquarie University, Sydney, Australia and Dr Gary Oliver from the University of Sydney, Australia. The conference will be opened with a keynote by Göran Roos, Advanced Manufacturing Council, Adelaide, Australia who will address the topic of “Intellectual capital in Australia: Economic development in a high cost economy”. The second day will be opened with a from James Guthrie, University of Sydney, Australia on the topic of “Intellectual Capital and the Public Sector Research: Past, Present, and Future”. The ICICKM Conference constitutes a valuable platform for individuals to present their research findings, display their work in progress and discuss conceptual advances in many different branches of intellectual capital, knowledge management and organisational learning. At the same time, it provides an important opportunity for members of the IC, KM and OL communities to come together with peers, share knowledge and exchange ideas. ICICKM has evolved and developed over the last decade, and the range of papers accepted in this year’s conference ensures an interesting two‐day event. Following an initial submission of 144 abstracts that have undergone a double blind peer review process, 53 Research papers, 13 PhD Research papers, 1 Master’s Research paper, 1 Work‐in‐Progress papers are published in the ICICKM 2014 Conference Proceedings, representing work from Australia, Canada, China, Colombia, Czech Republic, Denmark, Estonia, Finland, France, Iran, Italy, Japan, Malaysia, New Zealand, Nigeria, Poland, Romania, Russia, Saudi Arabia, Singapore, Slovakia, South Africa, South Korea, Sweden, Taiwan, UK and USA. We hope that you have an enjoyable conference.
Papers have been double-blind peer reviewed before final submission to the conference. Initially, paper abstracts were read and selected by the conference panel for submission as possible papers for the conference. Many thanks to the reviewers who helped ensure the quality of the full papers. These Conference Proceedings have been submitted to Thomson ISI for indexing.
Defining the strategic vision of the company, managers and owners almost always have a shortage of information about different investments potential effectiveness. At the first step the company should find a compromise between investments in traditional assets and intellectual capital accumulation. RAVE concept is mainly based on the premise that the intellectual capital outcomes, including its knowledge, the company marketing policy, purchasing and staff development, exceed the traditional assets outcomes. This article represents the critical analysis of the approach designed by BCG consultants and is devoted to the integrated economic value added - method development.
One of the basic factors of economic growth in the information knowledge - based economy is the innovation component determined by the level of intellectual capital usage. Of the specifics in the usage of intellectual capital is that the cost evaluation of intellectual resources on the macro-level as a factor of economic growth is extremely difficult and there are more evaluation possibilities on the micro-level. The risk's estimation based on making use of discount theory.
Value-based management concept regards corporate value growth for all stakeholders as the main company purpose which nowadays is primarily provided by intangible assets. However analysis of the process of converting intellectual capital (IC) and its components into the company financial performance is still a challenging research area. The main aim of the current study is to investigate the intellectual capital transformation into the company value on the basis of available information.
The paper examines the structure, governance, and balance sheets of state-controlled banks in Russia, which accounted for over 55 percent of the total assets in the country's banking system in early 2012. The author offers a credible estimate of the size of the country's state banking sector by including banks that are indirectly owned by public organizations. Contrary to some predictions based on the theoretical literature on economic transition, he explains the relatively high profitability and efficiency of Russian state-controlled banks by pointing to their competitive position in such functions as acquisition and disposal of assets on behalf of the government. Also suggested in the paper is a different way of looking at market concentration in Russia (by consolidating the market shares of core state-controlled banks), which produces a picture of a more concentrated market than officially reported. Lastly, one of the author's interesting conclusions is that China provides a better benchmark than the formerly centrally planned economies of Central and Eastern Europe by which to assess the viability of state ownership of banks in Russia and to evaluate the country's banking sector.
The paper examines the principles for the supervision of financial conglomerates proposed by BCBS in the consultative document published in December 2011. Moreover, the article proposes a number of suggestions worked out by the authors within the HSE research team.