Intellectual Capital as a Moderating Effect between Corporate Governance, and Firm Performance: A Conceptual Review

Firas N Mardan,Noriah Che-Adam,Zaimah Abdullah

doi:10.13189/ujaf.2021.090623

Abstract

This research hypothesized that intellectual capital had a moderating impact on the connection between corporate governance and company performance. Researchers and investors have been investigating, monitoring, and analyzing firm performance in light of the serious consequences of many corporate accounting scandals, such as Toshiba 2015, as well as the occurrence of numerous nations. After the economic crisis, the deterioration in corporate governance has shown that this lack of governance could have long-term macroeconomic consequences. As a result, good corporate governance practice is important to improve organizational efficiency, secure investor rights, strengthen investment climate, and promote economic development. The investment in expertise and intellectual capital has become one of the most significant assets required to increase its value, create a competitive advantage, and improve its performance. Along with corporate governance, intellectual capital is a key to business growth and can better explain disparities in the firm's financial performance. The findings of this study indicate that the role of intellectual capital as a moderator variable is designed to improve firm performance in combination with the structure of corporate governance, thereby promoting economic growth. Therefore, this study recommends that future research be conducted as a moderator of firm performance with the integration of corporate governance and intellectual capital. It may improve corporate governance practice, thus enhancing firm performance.

Highlights

Firm performance has been under reviewing, monitoring, and investigating by researchers and investors, after the occurrence of a series of financial crises in Brazil, the Russian Federation, and the Asian countries such as Malaysia [1, 2]
These findings suggest that South African businesses are less reliant on intellectual capital than their European counterparts, and that physical resources are more important in such nations when it comes to generating value
Ting and Lean [21] looked at the connection between financial institutions' intellectual capital and their performance in Malaysia. They measured intellectual capital using the Value-Added Intellectual Coefficient technique and looked at how it related to return on assets (ROA)

Summary

Introduction

Firm performance has been under reviewing, monitoring, and investigating by researchers and investors, after the occurrence of a series of financial crises in Brazil, the Russian Federation, and the Asian countries such as Malaysia [1, 2]. Increasingly transforming the market, where new strategies are required to increase competitiveness by controlling intellectual capital, rather than traditional board monitoring [20, 21] In this vein, the literature stream indicates that corporate governance is related to firm performance [22, 23]. Relevant papers for this article were discovered via searches of internet databases such as "Science Direct, Google Scholar, Scopus, ProQuest, EBSCOhost Research, and Emerald Insight." The literature search focusing on studies was published in prestigious journals and conferences in the fields of accounting, management, business, and finance This expectation expresses the testable hypothesis: H1: the effectiveness of intellectual capital moderates the relationship between corporate governance and firm performance

Board of Director

Ownership Structure

Intellectual Capital and Firm Performance

Moderating Effect of Intellectual Capital

Conclusions