A Literature Review on Intellectual Capital and Corporate Governance Effect on Companys Performance

Abstract

This paper examines the impact of intellectual capital and corporate governance on company’s performance in the world on the basis of previous studies. The study particularly focuses on how intellectual capital and its components such as human capital, structural capital and corporate governance variables such as board structure, ownership structure influence company’s performance. The review paper comprises of seven important parts. The first part of the paper reviews the literature on financial performance of companies. Second section reviews the literature on intellectual capital. Third part summarizes the literature on components of intellectual capital. Fourth section reviews the literature on corporate governance. Fifth section studies the literature on components of corporate governance. Sixth and seventh section studies the influence of intellectual capital and corporate governance variables on company’s performance. The study reveals that intellectual capital has significant relation with company’s performance and is an efficient indicator of long run performance of companies. Evidence also proves that corporate governance variables such as board size, number of committees, board meetings and ownership structure influence the performance of company’s both positively and negatively.