Intellectual Capital Impact on Investment Recommendations: Evidence from Indonesia

Dominique Razafindrambinina, Stephanie Santoso


Do investment advisors and brokers consider Intellectual Capital when providing investment recommendations? The data used are from publicly listed non-financial institutions on the Jakarta Stock Exchange. The ‘Value Added Intellectual Coefficient’ measures intellectual capital and its components namely human capital, structural capital, and capital employed. Market-to-book value as the dependent variable measures the worth of a company or the amount invested by shareholders.  The study found no significant relationship between intellectual capital and its components with brokers’ investment recommendations, however it reinforced that brokers’ recommendations are almost invariably based on financial performances. The results reveal that the Indonesian capital market has not capitalized on how intellectual capital might enhance a company’s potential. That could be attributed to the low awareness of the importance of intellectual capital by both brokers and investors at large.

Keywords: Investment Recommendations, Value Added Intellectual Coefficient, Financial Performances, Intellectual Capital, Investment Advisers

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