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Businesses worldwide are getting new opportunities and facing challenges due to increased market competition and the transformation of globalization dynamics. To become successful and to get a competitive edge, it has become imperative for companies to adopt modern business strategies. This study empirically examines the nexus between intellectual capital and firm value with the mediating role of firm performance. VAIC (value-added intellectual capital) has been taken as an independent variable along with its three components, i.e., VACA, VAHU, and STVA. ROA and ROE have been taken as a measure of firm performance. Firm value was measured through Tobin’s Q. The panel data was collected from non-financial firms listed on the Pakistan stock exchange for six years resulting in 474 observations. Fixed-effect regression test was conducted with the help of Eviews 9.0. The findings revealed that intellectual capital positively impacts the firm value. Moreover, firm performance mediates the nexus between intellectual capital and firm value. This study has contributed not only to literature related to intellectual capital, firm performance, and firm value but is also helpful for practitioners and managers as it provides insight into the specific components of intellectual capital, which generates firm value if invested and maintained efficiently and effectively.
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