The mediating role of intellectual capital in corporate governance and the corporate performance relationship

Corporate governance significantly effects corporate performance and this relationship is established through number of studies theoretically and empirically conducted in this field. Also, there are studies which show the relationship between corporate governance and intellectual capital performance. Furthermore, intellectual capital performance positively effects corporate performance as shown in the previous studies. These relationships trigger this study to explore the role of intellectual capital as a mediator between corporate governance and corporate performance relationship. This study focuses on the idea that governance measures, board of directors in this study, can contribute to the intellectual capital efficiency of the companies which in turn results in higher corporate performance. A single structural model of corporate governance, intellectual capital and corporate performance is conceptualized. In the model, board of directors, variables are taken as governance measures, Value Added Intellectual Coefficient (VAICTM) as intellectual capital performance measure and traditional financial measures as corporate performance measures. It is intellectual capital resources which act as mechanism through which the corporate governance is able to influence the corporate performance. Intellectual capital is taken as mediator to confirm that IC properly mediates the CG and performance relationship conceptually. This study will be beneficial for the research community to combine different areas of study under one model. This study will suggest the management and other regulatory bodies to understand the importance of intellectual capital along with governance and performance