Exploring the nexus of corporate governance and intellectual capital efficiency: from the lens of profitability

Khuram Shahzad (), Syed Quaid Ali Shah (), Fong-Woon Lai (), Ahmad Ali Jan (), Syed Azmat Ali Shah () and Muhammad Kashif Shad ()
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Khuram Shahzad: Abbottabad University of Science and Technology (AUST)
Syed Quaid Ali Shah: Universiti Teknologi PETRONAS
Fong-Woon Lai: Universiti Teknologi PETRONAS
Ahmad Ali Jan: Universiti Teknologi PETRONAS
Syed Azmat Ali Shah: Comsats University
Muhammad Kashif Shad: Universiti Teknologi PETRONAS

Quality & Quantity: International Journal of Methodology, 2023, vol. 57, issue 3, No 22, 2447-2468

Abstract: Abstract Previous literature revealed that corporate governance (CG) attributes enhance firm performance. However, scant empirical research is available on how the CG attributes improve the intellectual capital (IC) efficiency. To fill this gap, the present study explores the effect of CG on IC efficiency. This study also intends to explore the moderating role of profitability on the nexus of CG and IC to identify whether it affects physical and intellectual capabilities. Using the census sampling technique, this study utilized the panel data of services firms in Pakistan over the period 2016–2020. The study adopted Pulic’s model for computing IC efficiency, i.e., the value-added intellectual capital coefficient model. Fixed-effect model and two-stage least squares were utilized for the regression analysis. The study’s findings revealed that independent directors, the board size, audit committee, and remuneration committee have a significant negative relationship with IC efficiency. CEO duality has demonstrated a significant positive nexus with IC efficiency. Interestingly, the negative coefficient of audit and remuneration committees becomes positive with the moderation of profitability. This study adds to the literature on the vital role of CG in fostering IC efficiency. The findings of this study might be helpful for the policymakers, practitioners, and researchers to put in place a solid corporate governance structure that enhances physical and intellectual capabilities.

Keywords: Board size; Remuneration committee; Audit committee; Intangible assets; Return on asset; Return on equity (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s11135-022-01472-z

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