The influence of corporate governance factors on intellectual capital performance: Panel data evidence from the Indian banking sector
-
Author(s)Sathish KotteLink to ORCID Index: https://orcid.org/0000-0003-0654-049X
,
Irala Lokanandha ReddyLink to ORCID Index: https://orcid.org/0000-0003-2670-8130
-
DOIhttp://dx.doi.org/10.21511/bbs.18(2).2023.09
-
Article InfoVolume 18 2023, Issue #2, pp. 101-112
- 509 Views
-
219 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
This study empirically examined the relationship between corporate governance factors, namely CEO duality, independent directors, board meeting frequency, board size, gender diversity, audit committee size and audit committee meetings, and intellectual capital performance. The above premise is studied using data of 26 commercial banks listed on the Indian Stock Exchange (NSE) from 2010 to 2020. The study used purposive sampling as the methodology and multiple regression models with VAIC and ROA as attributes. VAIC measures the efficiency of intellectual capital. ROA is used to determine financial performance. The results of the study reveal that the use of observational data, independent directors, frequency of board meetings and audit committee size has a positive and significant effect on intellectual performance at a 10% significance level. According to the study’s findings, audit committee meetings have a positive impact on intellectual capital performance at a 1% significance level, while board size has a negative impact at a 5% significance level. Among the study results, CEO duality, board meeting frequency and board size have a positive and significant effect on financial performance with 1% significance. Board gender diversity has a negative impact on financial performance. The study’s findings indicate that there is no single best way to design corporate governance that applies to all corporate situations, and that good corporate governance factors have a significant impact on improved intellectual capital performance.
- Keywords
-
JEL Classification (Paper profile tab)G20, G30, G34, O34
-
References71
-
Tables3
-
Figures0
-
- Table 1. Descriptive statistics
- Table 2. Regression analyses for corporate governance factors’ impact on intellectual capital performance of scheduled commercial banks in India
- Table 3. Regression analyses for corporate governance factors impact on financial performance of Scheduled Commercial Banks (SCBs) in India
-
- Abidin, Z. Z., Kamal, N., & Jusoff, K. (2009). Board Structure and Corporate Performance in Malaysia. International Journal of Economics and Finance, 1(1), 150-164.
- Aboagye, A. Q., & Otieku, J. (2010). Are Ghanaian MFIs’ performance associated with corporate governance? Corporate Governance, 10(3), 307-320.
- AlHares, A., Dominic, G., & Al Abed, R. (2019). The corporate governance practices: Evidence from MENA countries. Theoretical Economics Letters, 9(4), 999-1019.
- Al-Musali, M. A. K., & Ismail, K. N. I. K. (2014). Intellectual Capital and its Effect on Financial Performance of Banks: Evidence from Saudi Arabia. Procedia – Social and Behavioral Sciences, 164, 201-207.
- Altuner, D., Çelik, S., & Güleç, T. C. (2015). The linkages among intellectual capital, corporate governance and corporate social responsibility. Corporate Governance, 15(4), 491-507.
- Appuhami, R., & Bhuyan, M. (2015). Examining the influence of corporate governance on intellectual capital efficiency evidence from top service firms in Australia. Managerial Auditing Journal, 30(4-5), 347-372.
- Ararat, M., Black, B. S., & Yurtoglu, B. B. (2017). The effect of corporate governance on firm value and profitability: Time-series evidence from Turkey. Emerging Markets Review, 30, 113-132.
- Arifin, J. (2016). Corporate Governance and Intellectual Capital on Financial Performance of Bank Sector Companies: Indonesia Stock Exchange 2008-2012. Journal of Administrative Sciences and Policy Studies, 4(1).
- Badia, F., Dicuonzo, G., Petruzzelli, S., & Dell’Atti, V. (2019). Integrated reporting in action: Mobilizing intellectual capital to improve management and governance practices. Journal of Management and Governance, 23(2), 299-320.
- Bansal, N., & Sharma, A. K. (2016). Audit Committee, Corporate Governance and Firm Performance: Empirical Evidence from India. International Journal of Economics and Finance, 8(3), 103.
- Berezinets, I., Garanina, T., & Ilina, Y. (2016). Intellectual capital of a board of directors and its elements: Introduction to the concepts. Journal of Intellectual Capital, 17(4), 632-653.
- Black, B. S., Love, I., & Rachinsky, A. (2006). Corporate governance indices and firms’ market values: Time series evidence from Russia. Emerging Markets Review, 7(4), 361-379.
- Bohdanowicz, L. (2014). Managerial Ownership, Supervisory Board Committees and Substitution. In M. Asal (Ed.), Contemporary Problems in Corporate Governance (pp. 23-44).
- Bontis, N. (1998). Intellectual capital: An exploratory study that develops measures and models. Management Decision, 36(2), 63-76.
- Bontis, N. (2002). Assessing knowledge assets: A review of the models used to measure intellectual capital. International Journal of Management Reviews, 3(1), 41-60.
- Brooking, A. (1996). Intellectual capital: Core asset for the third millennium Enterprise. London: International Thomson Business Press.
- Buallay, A. (2018). Audit committee characteristics: An empirical investigation of the contribution to intellectual capital efficiency. Measuring Business Excellence, 22(2), 183-200.
- Celenza, D., & Rossi, F. (2014). Intellectual capital and performance of listed companies: Empirical evidence from Italy. Measuring Business Excellence, 18(1), 22-35.
- Cenciarelli, V. G., Greco, G., & Allegrini, M. (2018). Does intellectual capital help predict bankruptcy? Journal of Intellectual Capital, 19(2), 321-337.
- Dalton, D. R., Daily, C. M., Ellstrand, A. E., & Johnson, J. L. (1998). Meta-analytic reviews of board composition, leadership structure, and financial performance. Strategic Management Journal, 19(3), 269-290.
- Duc, V., & Phan, T. (2013). Corporate governance and firm performance: Empirical evidence from Vietnam. Journal of Economic Development, 7(1), 62-78.
- Dutta, P., & Bose, S. (2007). Gender Diversity in the Boardroom and Financial Performance of Commercial Banks: Evidence from Bangladesh. The Cost & Management, 34(6), 70-74.
- Dwivedi, N., & Jain, A. K. (2005). Corporate governance and performance of Indian firms: The effect of board size and ownership. Employee Responsibilities and Rights Journal, 17(3), 161-172.
- Dzinkowski, R. (2000). The Measurement and Management of Intellectual Capital. Management Accounting, 78(2), 32-36.
- Edvinsson, L., & Malone, M. S. (1997). Intellectual capital: The proven way to establish your company’s real value by finding its hidden brainpower. New York: HarperBusiness.
- Faisal, M., Hassan, M., Shahid, M. S., Rizwan, M., & Qureshi, Z. A. (2016). Impact of Corporate Governance On Intellectual Capital Efficiency: Evidence from KSE Listed Commercial Banks. Science International (Lahore), 28(4), 353-361.
- Firstenberg, P. B., & Malkiel, B. G. (1994). The twenty-first century boardroom who will be in charge? MIT Sloan Management Review, 36(1), 27.
- Ghosh, S. (2006). Do board characteristics affect corporate performance? Firm-level evidence for India. Applied Economics Letters, 13(7), 435-443.
- Giuliani, M., & Chiucchi, M. S. (2019). Guess who’s coming to dinner: The case of IC reporting in Italy. Journal of Management and Governance, 23(2), 403-433.
- Hamdan, N., Mcknight, P. E., Mcknight, K., & Arfstrom, K. M. (2013). The flipped learning model: A white paper based on the literature review titled a review of flipped learning. Flipped learning Network/pearson/George Mason University.
- Haniffa, R., & Hudaib, M. (2006). Corporate governance structure and performance of Malaysian listed companies. Journal of Business Finance & Accounting, 33(7-8), 1034-1062.
- Hidalgo, R. L., Garcia-Meca, E., & Martinez, I. (2011). Corporate governance and intellectual capital disclosure. Journal of Business Ethics, 100(3), 483-495.
- Hillman, A. J., & Dalziel, T. (2003). Boards of directors and firm performance: Integrating agency and resource dependence perspectives. Academy of Management Review, 28(3), 383-396.
- Inkinen, H. (2015). Review of empirical research on intellectual capital and firm performance. Journal of Intellectual Capital, 16(3), 518-565.
- Iqbal, J., & Zaib, J. (2017). Corporate Governance, Intellectual Capital and Financial Performance of Banks listed in Pakistan Stock Exchange. Pakistan Administrative Review, 1(3), 175-196.
- Kamath, B. (2019a). Board Characteristics and Intellectual Capital Performance: A Comparison of Service vs. Manufacturing Firms in India. Scholedge International Journal of Business Policy & Governance, 6(1), 1.
- Kamath, B. (2019b). Impact of corporate governance characteristics on intellectual capital performance of firms in India. International Journal of Disclosure and Governance, 16(1), 20-36.
- Keenan, J., & Aggestam, M. (2001). Corporate Governance and Intellectual Capital: Some conceptualisations. Corporate Governance: An International Review, 9(4), 259-275.
- Kiel, G. C., & Nicholson, G. J. (2003). Board Composition and Corporate Performance: How the Australian experience informs contrasting theories of corporate governance. Corporate Governance: An International Review, 11(3), 189-205.
- Li, J., Mangena, M., & Pike, R. (2012). The effect of audit committee characteristics on intellectual capital disclosure. The British Accounting Review, 44(2), 98-110.
- Liang, C.-J., Huang, T.-T., & Lin, W.-C. (2011). Does ownership structure affect firm value? Intellectual capital across industries perspective. Journal of Intellectual Capital, 12(4), 552-570.
- Mahmudi, B., & Nurhayati, E. (2015). The Influence of Board Governance Characteristics on Intellectual Capital Performance (Empirical Study on Listed Banks in BEI 2008-2012). Review of Integrative Business and Economics Research, 4(1), 417.
- Makki, M. A. M., & Lodhi, S. A. (2014). Impact of Corporate Governance on Intellectual Capital Efficiency and Financial Performance. Pakistan Journal of Commerce and Social Sciences, 8(2), 305-330.
- Meressa, H. A. (2016). Determinants of intellectual capital performance: Empirical evidence from Ethiopian banks. Research Journal of Finance and Accounting, 7(13), 10-19.
- Mohd-Saleh, N., & Rahman, M. R. C. A. (2009). Ownership structure and intellectual capital performance in Malaysia. Asian Academy of Management Journal of Accounting and Finance, 5(1), 1-29.
- Petty, R., & Guthrie, J. (2000). Intellectual capital literature review: Measurement, reporting and management. Journal of Intellectual Capital, 1(2), 155-176.
- Phusavat, K., Comepa, N., Sitko-Lutek, A., & Ooi, K. B. (2011). Interrelationships between intellectual capital and performance: Empirical examination. Industrial Management & Data Systems, 111(6), 810-829.
- Pulic, A. (1998). Measuring the performance of intellectual potential in knowledge economy. In9th Annual National Business Conference (pp. 1-20).
- Renders, A., Gaeremynck, A., & Sercu, P. (2010). Corporate-Governance Ratings and Company Performance: A Cross-European Study. Corporate Governance, 18(2), 87-106.
- Rodrigues, L. L., Tejedo-Romero, F., & Craig, R. (2017). Corporate governance and intellectual capital reporting in a period of financial crisis: Evidence from Portugal. International journal of Disclosure and Governance, 14, 1-29.
- Roos, J., Roos, G., Dragonetti, N. C., & Edvinsson, L. (1997). Intellectual capital: Navigating the new business landscape. Springer.
- Safieddine, A. (2009). Islamic financial institutions and corporate governance: New insights for agency theory. Corporate Governance: An International Review, 17(2), 142-158.
- Sanda, A. U., Mikailu, A. S., & Garba, T. (2010). Corporate governance mechanisms and firms’ financial performance in Nigeria. Afro-Asian Journal of Finance and Accounting, 2(1), 22.
- Sarkar, J., Sarkar, S., & Sen, K. (2008). Board of Directors and Opportunistic Earnings Management: Evidence from India. Journal of Accounting, Auditing & Finance, 23(4), 517-551.
- Scafarto, V., Ricci, F., & Scafarto, F. (2016). Intellectual capital and firm performance in the global agribusiness industry: The moderating role of human capital. Journal of Intellectual Capital, 17(3), 530-552.
- Shahwan, T. M., & Habib, A. M. (2020). Does the efficiency of corporate governance and intellectual capital affect a firm’s financial distress? Evidence from Egypt. Journal of Intellectual Capital, 21(3), 403-430.
- Shrader, C. B., Blackburn, V. B., & Iles, P. (1997). Women In Management And Firm Financial Performance: An Exploratory Study. Journal of Managerial Issues, 9(3), 355-372.
- Singh, S., Tabassum, N., Darwish, T. K., & Batsakis, G. (2018). Corporate Governance and Tobin’s Q as a Measure of Organizational Performance. British Journal of Management, 29(1), 171-190.
- Stewart, T. A. (1998). Intellectual capital: The new wealth of organizations. Crown Business.
- Sveiby, K. E. (1997). The new organizational wealth: Managing & measuring knowledge-based assets. Berrett-Koehler Publishers.
- Taliyang, S. M., & Jusop, M. (2011). Intellectual capital disclosure and corporate governance structure: Evidence in Malaysia. International journal of Business and Management, 6(12), 109.
- Teece, D. J. (1981). The market for know-how and the efficient international transfer of technology. The Annals of the American Academy of Political and Social Science, 458(1), 81-96.
- Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509-533.
- Vafeas, N. (2003). Length of board tenure and outside director independence. Journal of Business Finance and Accounting, 30(7-8), 1043-1064.
- Van der Meer-Kooistra, J., & Zijlstra, S. M. (2001). Reporting on intellectual capital. Accounting, Auditing & Accountability Journal, 14(4), 456-476.
- Veltri, S., & Mazzotta, R. (2016). The association of board composition, intellectual capital and firm performance in a high ownership concentration context: Evidence from Italy. International Journal of Business and Management, 11(10), 317.
- Volkov, D., & Garanina, T. (2007). Intangible Assets: Importance in the Knowledge Based Economy and the Role in Value Creation of a Company. Electronic Journal of Knowledge Management, 5(4), 539-550.
- Wang, M. C. (2013). Value relevance on intellectual capital valuation methods: The role of corporate governance. Quality and Quantity, 47(2), 1213-1223.
- Wicaksono, A. P. N. (2022). Gender Diversity, Financial Expertise, Ceo Duality and Firm Performance. Jurnal Ilmiah Bisnis Dan Ekonomi Asia, 16(1), 1-14.
- Wu, M.-F., Lee, Y.-J., & Wang, G.-L. (2012). To verify how intellectual capital affects organizational performance in listed Taiwan IC design companies with considering the moderator of corporate governance. Journal of Global Business Management, 8(1), 20-32.
- Zerenler, M., & Gozlu, S. (2008). Impact of Intellectual Capital on Exportation Performance: Research on the Turkish Automotive Supplier Industry. Journal of Transnational Management, 13(4), 318-341.
-
Determinants of dividend policy
Asma Salman 
doi: http://dx.doi.org/10.21511/imfi.16(1).2019.13
Investment Management and Financial Innovations Volume 16, 2019 Issue #1 pp. 167-177 Views: 2955 Downloads: 638 TO CITE АНОТАЦІЯPakistan’s capital market and economy have significant features for examining the dynamics of the dividend policy. The agency conflicts between the management and the investors of the firms are main barriers to the success of the firm. The shareholder is generally taking away all the rights and similarly has a control on the decision concerning the dividend policy. The dividends are conveying better information than any other source regarding the firm’s prospects. The aim of this research is to identify and analyze the influence of shareholder preference and dividend signaling on the dividend policy of the corporations in Pakistan. The respective study presents the analysis of top financial management beliefs by taking eighty listed corporations on Pakistani stock exchanges during 2017–2018. Pearson correlation and multiple regressions are applied on responses to explore whether there is an influence regarding the shareholder preferences and the signaling mechanism on the dividend policy of the listed firms in Pakistan. Through statistical techniques the findings proved that shareholder preferences and dividend signaling have a positive and significant relationship with the dividend policy of listed corporations. Dividend policy is the response of investor preferences and signaling aspect of dividends.
-
Innovation risk management in financial institutions
Svitlana Mishchenko ,
Svitlana Naumenkova ,
Volodymyr Mishchenko ,
Dmytro Dorofeiev
doi: http://dx.doi.org/10.21511/imfi.18(1).2021.16
Investment Management and Financial Innovations Volume 18, 2021 Issue #1 pp. 190-202 Views: 1775 Downloads: 1392 TO CITE АНОТАЦІЯThe extensive use of financial technologies and innovations in the provision and utilization of financial products and services causes new risks that require constant attention. The article aims to improve innovation risk management methods to increase the operational stability of financial institutions in Ukraine. By generalizing international practice, the types of innovation risks are classified, and their impact on the activities of financial institutions and consumers is characterized. The attention is drawn to the control strengthening over the impact of operational and regulatory risks, based on important theoretical provisions contained in WBG, BIS, BCBS, and FSB documents. An organizational scheme for the interaction of a financial institution and an IT company is proposed to conclude “smart contracts” based on the use of a cloud service and blockchain technology. The authors propose additional methods of insurance protection and compensation for losses caused by the implementation of risks of using ICT and innovation based on creating the Collective Risk Insurance Fund of financial institutions; offer approaches to the calculation of variable and fixed parts of the contribution to the insurance fund for certain groups of financial institutions. It is concluded that to maintain the proper operational stability of financial institutions in Ukraine, it is necessary to introduce additional collective compensation methods for the risks of innovation and the strengthening of cyber threats.
-
The impact of microfinance on microenterprises
Investment Management and Financial Innovations Volume 14, 2017 Issue #3 pp. 82-92 Views: 1520 Downloads: 1079 TO CITE АНОТАЦІЯThe provision of and access to financial services, particularly credit, can contribute greatly to the development of microenterprises in South Africa. Such provision has been an issue ignored by conventional banks or formal financial institutions. The problem associated with this ignorance includes high transaction and operation costs, lack of collateral, and the inability to obtain information about microenterprises resulting in difficulties to extend such credit. Microfinance therefore becomes an alternative to conventional banking and a mainstream and sustainable development activity for extending credit to microenterprises. However, the benefits of microfinance, which include, among others, the ability to provide the much-needed financial support for microenterprises, have not been fully harnessed in South Africa. The objective of this article is to evaluate the impact of microfinance on microenterprises in a typical South African township and to propose specialized financial mechanisms to support and improve the provision of credit to microenterprises. The article draws on the findings of a study undertaken in the Ga-Rankuwa township located in the Tshwane Metropolitan area in the Gauteng province of South Africa. It further draws on a wide range of extensive review of literature that documents the impact of microfinance on microenterprises. A case study approach is adopted and mixed method research paradigm (qualitative and quantitative) is used to gather information. Structured questionnaires and interviews were used to solicit information from the randomly selected microfinance institutions and microenterprises in the Ga-Rankuwa township.
