This study examines the impact of intellectual capital on firm value, emphasizing the mediating role of financial performance. It applies the Value Added Intellectual Coefficient (VAIC) model to a sample of industrial companies listed on the Iraq Stock Exchange. The main problem addressed is that many firms continue to rely primarily on physical capital while neglecting human capital and innovation, which are essential components of intellectual capital and key drivers of competitive advantage and value creation.
A descriptive-analytical methodology was adopted to investigate the relationships among the study variables. Financial data were collected from the annual reports of 11 industrial companies over a five-year period from 2020 to 2024, resulting in 55 observations. The data were analyzed using correlation matrix analysis, linear regression, and the SPSS statistical package to test the research hypotheses and determine the nature of relationships among variables.
The study variables include intellectual capital as the independent variable, measured through human capital, structural capital, and capital employed. Financial performance is treated as a mediating variable and measured using indicators such as return on assets, return on equity, earnings per share, and net profit margin. Firm value is the dependent variable and is measured by the year-end closing share price.
The findings indicate a significant positive relationship between intellectual capital and financial performance, as well as between financial performance and firm value. The results further show that intellectual capital has an indirect effect on firm value through financial performance, confirming the mediating role of financial performance. Additionally, the impact of intellectual capital components varies, with human capital and capital employed showing stronger effects than structural capital. Overall, the study concludes that improving intellectual capital efficiency enhances financial performance and ultimately increases firm value in industrial companies.