Abstract
PurposeThe purpose of this study is to examine the impact of corporate governance (CG) on intellectual capital efficiency (ICE) in Islamic banks (IBs) of Organisation of Islamic Cooperation (OIC) countries.Design/methodology/approachA sample of 129 IBs is drawn from the 29 OIC countries from 2008 to 2017. A two-step system of the generalised method of moments has been employed to account for the unobserved endogeneity and heteroscedasticity issue that arose due to time-variant and time-invariant variables.FindingsThe results revealed that CG measures, namely board size, non-executive directors do explain the extent and quality of ICE in the expected direction. In contrast, CEO duality, Shariah board and audit committee are negatively associated with the ICE. Moreover, the authors observed that male CEO in IBs has negative, but foreign ownership has a positive association with ICE in determining the extent of ICE in IBs. This study contributes specifically to the stakeholder theory and the literature of ICE and CG.Research limitations/implicationsThe findings of the study provide insight into how a larger board can overcome skill deficiency and how making more investment in ICE would help to enhance productivity. Hence, bank managers, regulators, policymakers and shareholders have strong interest in designing the appropriate CG structure to develop ICE in banks.Originality/valueThis is one of the few studies which provide empirical evidence of CG mechanism to boost the ICE in the perspective of IBs of the OIC countries.
Highlights
In an era of a knowledge-based economy, intellectual capital (IC) is increasingly being recognised as an important strategic asset in the process of creating value for organisations (Appuhami and Bhuyan, 2015; Buallay, 2018)
These results indicate that for the current year, the level of intellectual capital efficiency (ICE) in terms of human capital efficiency (HCE), structural capital efficiency (SCE) and relational capital efficiency (RCE) is significantly affected by the past year of HCE, SCE and RCE value of the Islamic banks
The objective of this study is to investigate the influence of internal corporate governance (CG) structure on ICE in Islamic banks (IBs) of OIC countries
Summary
In an era of a knowledge-based economy, intellectual capital (IC) is increasingly being recognised as an important strategic asset in the process of creating value for organisations (Appuhami and Bhuyan, 2015; Buallay, 2018). It is considered one of the most significant factors of creating knowledge, expertise relationships, creativity, innovation, information technology and interpersonal activities to gain competitive advantage among the organisations (Ahmed and Ghazali, 2013; Haris et al, 2019). The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/ legalcode
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