Corporate Governance in Knowledge Economy-The relevance of Intellectual Capital

Traditionally Corporate Governance was associated with the size, composition, qualification and role of directors. The meaning and relevance of Corporate Governance is also changing with times. However Corporate Governance has emerged as an indispensable aspect of Management. In the past, the corporate value was mostly measured by the tangible assets reflected in the book value of the companies. In the knowledge-based economy numerous corporate organizations have utilized Intellectual Assets for their competitive advantage to create corporate value. The value created by Intellectual Assets is often not reflected in the financial statements of these companies. The growing difference between book value and market value of companies could perhaps explain the role of Intellectual Assets. The crash of the dot com companies and the debacle of Enron and World Com have refocused the discussion on Intellectual Assets and its indispensability in Financial Management, more so in Corporate Governance. Intellectual Capital: The Pre-eminent Resource of Knowledge Economy