The influence of corporate governance on intellectual capital efficiency: evidence from Islamic banks of OIC countries

Ejaz Aslam · Razali Haron

31 citations0/0 files storedAsian Journal of Accounting Research

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Intellectual Capital and Performance Analysis Corporate Finance and Governance Islamic Finance and Banking Studies

Abstract

Purpose The 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/approach A 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. Findings The 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/implications The 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/value This 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.

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References

1998Initial conditions and moment restrictions in dynamic panel data models 1995Initial conditions and moment restrictions in dynamic panel data models 2005Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity 2011Risk management, corporate governance, and bank performance in the financial crisis 2013Does board structure in banks really affect their performance?2012The effect of audit committee characteristics on intellectual capital disclosure 2016The governance, risk-taking, and performance of Islamic banks 2018Intellectual Capital, Financial Performance and Companies’ Sustainable Growth: Evidence from the Korean Manufacturing Industry

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2021Environmental, Social, and Governance Information Disclosure and Intellectual Capital Efficiency in Jordanian Listed Firms 2024Human capital and financial performance of Islamic banks: a meta-analysis

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