PurposeThe purpose of this study is to empirically investigate the relationship between intellectual capital and corporate governance of Oman's financial sector companies. Intellectual capital has been found to successfully contribute to the economic wealth creation of firms in germane literature. Unfortunately, financial statements do not necessarily capture and reflect the contributions of intellectual capital, thereby leading to an information asymmetry between companies and users of financial statements. The research also investigates the relationship between corporate governance and intellectual capital efficiency across various financial subsectors.Design/methodology/approachData are collected from annual reports available on Muscat Securities Market for 31 listed financial sector companies for the period 2012 to 2016 and analyzed using a multiple regression model. Intellectual capital is measured using Pulic's efficiency measure of value-added intellectual coefficient (VAIC). Corporate governance individual components such as board characteristics, audit committee characteristics and ownership structure are presented as independent variables.FindingsThe findings suggest that board size and frequency of audit committee meetings have a significant association with the intellectual capital efficiency of Oman's financial sector. VAIC and human capital efficiency of banks are also significantly influenced by most of the corporate governance mechanisms; however, other subsectors do not report such findings. Corporate governance of banks in comparison to other subsectors effectively engages in utilizing the potential of intellectual capital efficiency. Agency theory and resource dependency theory find limited support as a result of this study. The GMM results are not robust to the alternative instruments.Research limitations/implicationsThe sample size is small as the study is limited to the listed financial sector of Oman. Future studies can be extended to include all of Oman's or GCC’s listed companies. Additionally, the intellectual capital is measured using the construct of VAIC which suffers some limitations and can be overcome using other tools such as content analysis.Practical implicationsThe findings of this study suggest that Oman's regulators can create an awareness strategy on highlighting the importance of intellectual capital for companies (board of directors and managers), investors, debtors and creditors. Further, Oman's Capital Market Authority and Muscat Securities Market need to strengthen the regulations related to intellectual capital.Originality/valueThis study extends intellectual capital and corporate governance literature by presenting the research outcome for Oman's financial sector. It is useful for Oman's financial sector companies to direct corporate governance measures for driving value creation of firms through the management of intellectual capital efficiency.

PurposeThe readability of annual reports is an important feature that determines the quality of communication between a firm and its stakeholders. Extant literature has demonstrated that readability characteristics of annual reports are crucial in facilitating the investor's ability to process and analyze information, resulting in higher firm performance and lower agency costs. This study examines the relationship between annual report readability, agency costs and the firm performance of listed financial sector companies in Oman.Design/methodology/approachUsing a sample of 150 firm-year observations of listed financial sector companies on the Muscat Securities Market (MSM) over the period 2014 to 2018, a panel regression analysis is used, along with the system generalized method of moments (GMM) estimation to address endogeneity concerns. The readability of annual reports is proxied by the length of the annual report, the Flesch reading ease and the Flesch–Kincaid index.FindingsThe ordinary least squares (OLS) results suggest that readability proxied by the length of the annual report has no significant relationship with agency cost, return on assets (ROA) or stock returns. The OLS results are confirmed through the system GMM estimation model for agency costs, Tobin's Q and stock returns. Easier-to-read annual reports measured by the Flesch reading ease demonstrate high asset utilization ratio and Tobin's Q. These results emphasize Flesch reading ease measure in explaining the economic significance of agency cost and Tobin's Q. In contrast, difficult-to-read annual reports are observed for firms with high ROA.Research limitations/implicationsThe study is limited to the financial sector. Its generalizability could be extended to a similar sector or countries with features similar to Oman. Future studies on readability could be extended to other sectors of Oman, and financial firms with easier-to-read annual reports show a high Tobin's Q, which reflects the confidence of investors in the stock market. These findings may encourage policymakers to regulate the readability features of annual reports and influence the reporting quality of financials and disclosures also including cross-country comparisons.Practical implicationsFinancial firms with easier-to-read annual reports show a high Tobin's Q, which reflects the confidence of investors in the stock market. These findings may encourage policymakers to regulate the readability features of annual reports and influence the reporting quality of financials and disclosures.Originality/valueWhile the study extends prior literature on readability, agency costs and firm performance, it is also one of the first to examine the financial sector of an emerging country, namely, Oman. The study supports the obfuscation hypothesis through the association of readability measure with agency cost. Unlike prior research that has focused on common computational linguistic literature, this study uses three proxies for readability to assess information quality.

PurposeThis study examines the impact of intellectual capital efficiency and corporate governance mechanisms on the annual report readability of Oman's financial sector companies.Design/methodology/approachThe study uses a sample of 150 firm-year observations of listed financial sector companies in the Muscat Securities Market, Oman, from 2014 to 2018. Flesch Reading ease and Flesch Kinkaid Index are used as proxies for annual report readability. As part of sensitivity analysis, the study also uses the natural logarithm of annual report pages as alternative readability measures. The investigation is conducted using random effects regression analysis and supported with system GMM estimation for robustness.FindingsThe findings of this study demonstrate a decrease in intellectual capital efficiency associated with better readability of annual reports for the financial sector firms. Alternatively, banks report a positive association of intellectual capital efficiency with the Flesch Reading ease score of the annual report. The structural capital and capital employed efficiency are also found to be negatively associated with annual report readability. Corporate governance mechanisms such as dispersed ownership and audit committee size also result in easy-to-read annual reports that support agency theory.Research limitations/implicationsThe research was conducted for financial firms of Oman, and thereby the findings can be generalized to the financial sector of countries with similar settings, such as the Gulf Cooperation Council (GCC) region.Practical implicationsThe policy implications arising from this study suggest a strengthening of the intellectual capital efficiency and corporate governance mechanisms to improve the readability of the firms and thereby increase investor confidence.Originality/valueThis paper's uniqueness is in the model used to investigate the impact of intellectual capital efficiency and corporate governance mechanisms on the annual report readability of an emerging market.

PurposeThis study investigates the impact of managerial ability and auditor report readability on the cost of debt and corporate liquidity in Omani-listed industrial companies.Design/methodology/approachThe study uses data from the S&P Capital IQ database and audited annual reports published on Muscat Securities Market. The sample consists of 35 firms (175 firm-year observations) from 2015 to 2019. Managerial ability is measured using the data envelopment analysis proposed by Demerjian et al. (2012a, b). Auditor report readability is measured as a log of the auditor report digital file size proposed by Loughran and McDonald (2014).FindingsThis study finds that a company's managerial ability reduces the cost of debt lending support to upper echelons and agency theory. Highly able managers of industrial companies are associated with increased corporate liquidity consistent with the precautionary motive of holding cash. In addition, less-readable auditor reports contribute to higher debt costs and reduce corporate liquidity.Originality/valueTo the best of the authors’ knowledge, few studies have explored the influence of managerial ability and auditor reporting readability on firms' financial policy. For industrial-sector firms, this study demonstrates the managerial ability and readability of auditor readability as significant determinants of the cost of debt and corporate liquidity, especially during periods of uncertainty. Thus, the findings can be generalized to other non-financial sector firms in the country and the Middle East.

Purpose: The purpose of this research is to investigate the determinants of the capital structure of tourism companies in Oman. This study uses the trade-off theory and pecking order theory to postulate hypotheses related to determinants of capital structure. Methodology: In line with extant literature, size, liquidity, tangibility, growth opportunities, and risk are used as the determinants of the capital structure. The sample in this study includes nine listed tourism companies for the period 2007 to 2016, which aggregates to 90 firm-year observations. Main findings: The results show that the capital structure of tourism companies is influenced by size, growth, and risk. The trade-off theory and pecking order theory are useful for partially explaining the leverage decisions of Oman's tourism companies. Implications: The empirical findings of this research imply that tourism companies' corporate managers can make optimal capital structure decisions based on determinants. Novelty: To the best of the author's knowledge, this study is a first for examining the determinants of capital structure for Oman's tourism companies using data over ten years. It lends support to the determinants identified in prior literature for developed and developing countries.