THE RELATIONSHIP OF INTELLECTUAL CAPITAL TOWARDS MARKET TO BOOK VALUE RATIO (CASE STUDY IN BANKING SECTOR COMPANIES THAT LISTED IN INDONESIA STOCK EXCHANGE PERIOD 2011)

Abstract

The Increasing gap between firms book value and market value become a critical point in the accounting and finance discipline as this gap badly effect to the investor decision-making process. This research aims to examine the significant impact of intellectual capital (human capital, structure capital and capital employed) on corporate market to book value ratio. Human capital is the stock of knowledge and skill in the company that represents by its employees. Human capital measured by VAHU (value added human capital). Structure capital is the availability of information system, knowledge applications, databases and the processes that required by company to support the company in doing their strategy. Structure capital measured by STVA (structure capital value added). Capital employed is the funds that used by company to create value added in the company itself. Capital employed measured by VACA (value added capital employed) and market to book value ratio is the different between book value and market value that measured by divided market value of the company with its book value. Population in this research is from banking sector companies while the Sample of this research is banking sector companies that listed in Indonesia Stock Exchange (IDX) on 2011. Sample used in this research were 30 companies. This research use secondary data. The data is from financial statement of each company that has been audited and published through Indonesia stock exchange website. This research uses multiple regression tests for data analysis. The result showed that intellectual capital provides a significant impact on market to book value ratio. Overall, this research found that Capital employed gives the most contribution in creating valued added of the company.