THE MODERATING EFFECT OF INTELLECTUAL CAPITAL ON THE RELATIONSHIP BETWEEN CORPORATE GOVERNANCE AND COMPANIES PERFORMANCE IN PAKISTAN

  • Sajad Nawaz Khan School of Accountancy Universiti Utara Malaysia
  • Engku Ismail Ali School of Accountancy Universiti Utara Malaysia
Keywords: Corporate governance, Performance, Intellectual capital

Abstract

During the global financial crises, the prominence of corporate governance was realized after the major loopholes identified in corporate policies and conspicuous corporate scandals all over the world. Developed countries have passed several laws such as the “Say on Pay” or the “Sarbanes-Oxley Act” to protect the shareholder's wealth. On the contrary, developing countries are still thriving to gain effective corporate governance recognition. This study examined the moderating effect of intellectual capital on the relationship between corporate governance and firm performance. The current study uses four-year panel data from 2012 to 2015. Linear regression, correlated panels corrected standard errors (PCSEs) are used in the analysis. The findings of the study indicate that the intellectual capital has a significant effect on the relationship between board size, board financial expertise, CEO duality, gender diversity and firm performance (ROA). On the other hand, it does not seem to moderate the relationship between board independence and firm performance (ROA). Similarly, the findings indicate that intellectual capital has a significant relationship between board size, board independence, CEO duality, gender diversity and firm performance (ROE) has no moderating effect on the relationship between board financial expertise and firm performance (ROE). Moreover, the empirical results highlight the significance of intellectual capital for regulations and policy making.

Published
2018-11-20
How to Cite
Nawaz Khan, S., & Ali, E. I. (2018). THE MODERATING EFFECT OF INTELLECTUAL CAPITAL ON THE RELATIONSHIP BETWEEN CORPORATE GOVERNANCE AND COMPANIES PERFORMANCE IN PAKISTAN. Journal of Governance and Integrity, 2(1), 12-22. https://doi.org/10.15282/jgi.2.1.2018.5534
Section
JGI Vol. 2, Issue 1, December 2018