J. Basic. Appl. Sci. Res., 4(3)232-239, 2014 © 2014, TextRoad Publication ISSN 2090-4304 Journal of Basic and Applied Scientific Research www.textroad.com *Corresponding Author: Amna Sami, MS Scholar, COMSATS Institute of Information Technology Sahiwal, Pakistan. E-mail: ammei_5@hotmail.com Intellectual Capital and Financial Performance: A Comparative Investigation of Top Five Sectors of Pakistan Amna Sami 1 , Dr. Hafiz Muhammad Arshad 2 , Rana Umair Ashraf 1,3 1 MS Scholar, COMSATS Institute of Information Technology Sahiwal, Pakistan 2 Assistant Professor, COMSATS Institute of Information Technology Sahiwal, Pakistan 3 Research Associate, COMSATS Institute of Information Technology Vehari, Pakistan Received: December 31 2013 Accepted: January 25 2014 ABSTRACT Intellectual capital is way to gain competitive advantage on other rivals. This study captured five sectors of Pakistan to get the idea that which sector performs better with respect to the concept of intellectual capital. For this purpose five years’ financial data from profit & loss statements and balance sheets of organizations of these five sectors used. After that with help of E-VIEWS software regression analysis perform for declaration of final result. At last results showed that three out of five sectors follow this concept and sector of personal goods among all five sectors performs best. KEY WORDS: Intellectual capital, human capital, structural capital and capital employed. 1. INTRODUCTION Intellectual capital is technique of attaining the competitive edge by consuming human, structural and physical capital in distinctive way. This concept is essential due to intangibility characteristics same as other intangible assets. This concept is associated with knowledge management, which guides us the way to achieve the desire goal. This is one reason many studies proved that enhancement in intellectual capital causes improvement in progression for example Indian software sector prove it (Ghosh & Mondal, 2009). Narvekar & Jain (2006) identify that by enhancing skills organization will be able to increase the profits not only in short run but on other hand they sacrifice their comfort level and unable to gain long term profits. Pulic (2004)identified that skills enhancement required massive investment for gaining profits. Main focus of study is on“ top five sectors of pakistan”on basis of market capitalization. Basically major cause of selecting top five sectors is to make comparison that which sector performs better in comparison with others and follow pattern of intellectual capital. Reason behind this investigation is not only determine what happens if components of intellectual capital show improvement? Anon (2005) explained the same concept of improvement in intellectual capital not only enhance the organization worth but also helps to earn extra profit. So, five sectors under consideration were:  Real Estate Investment and Services sector  Chemicals sector  Construction and Materials sector  Personal Goods sector  Fixed Line Telecommunication sector Now these days, financial institutions experienced change and competition. So, this study is a reasonable way to inspect which sector of Pakistan performs better. Thus, Intellectual capital is judge as vital business resource that is considerable for financial advancement. Chen et al., (2005) investigate major optimistic effect of intellectual capital on company’s market value. Further a study explained that intellectual capital consists of all intangible assets that are necessary for the organizational progression (Roos & Roos, 1997). On the basis of above explanation following objectives of the investigation drawn:  To investigate the relation between intellectual capital and financial performance of top five sectors of Pakistan.  To investigate which sector performs better with respect to intellectual capital among all five sectors of Pakistan. After the introduction in first part of paper, 2 nd part explained brief literature review on particular topic. 3 rd part explained theoretical frame work in which explanation of dependent and independent variables done. 4 th part explained all possible research hypothesis of study and 5 th part explained research methodology in which method of data collection and analysis done. At last 6 th and 7 th part elaborated the findings and conclusion of study respectively. 232