American Journal of Applied Sciences

Does Intellectual Capital Affect the Volatility of Returns? An Empirical Investigation on Italian Listed Companies

Brett W. Cantrell, Daniela Coluccia, Stefano Fontana and Silvia Solimene

DOI : 10.3844/ajassp.2017.1209.1219

American Journal of Applied Sciences

Volume 14, Issue 12

Pages 1209-1219


In modern information economies, economic success increasingly depends on the ability to apply knowledge and to transform it into firm value. While intellectual capital plays a critical role in firm success, it is an intangible asset that is difficult to measure and that is unrecorded by the firm. Difficulties in measuring intellectual capital, as well as the dynamic nature of the firms that rely on it, may lead to greater stock market volatility/risk. Consistent with this expectation, in statistical tests we find that intellectual capital, measured by VAIC, positively relates to the volatility of stock returns section among Italian listed companies. We find this positive relation for two components of a firm’s risk: systematic risk and specific risk. The finding is relevant to both investors concerned with understanding the risk/reward balance of particular investments and regulators concerned with market stability.


© 2017 Brett W. Cantrell, Daniela Coluccia, Stefano Fontana and Silvia Solimene. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.