Does the efficiency of corporate governance and intellectual capital affect a firm's financial distress? Evidence from Egypt

Shahwan, Tamer Mohamed; Habib, Ahmed Mohamed

doi:10.1108/jic-06-2019-0143

Cited by 86 publications

(124 citation statements)

References 138 publications

(163 reference statements)

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“…The detailed description of the corporate governance items of these four sub-dimensions can be found in Abousamak and Shahwan (2018, pp. 345–346) and Shahwan and Habib (2020). An equal weighted dichotomous approach was used to compute the aggregate corporate governance score derived from the CGI.…”

Section: Measuring Corporate Governance Intellectual Capital and Corporate Performancementioning

confidence: 99%

“…According to Pulic (1998), a high level of VAIC in a firm indicates a high degree of integration between the IC and the firm’s resources. Accordingly, the proposed VAIC model has been considered the primary measure of IC performance (Chen et al , 2005; Laing et al , 2010; Shahwan and Habib, 2020). However, several crucial aspects of the VAIC model should be considered, namely: VAIC is not an alternative to other traditional performance metrics but complements these traditional indicators (Iazzolino and Laise, 2013); and VAIC ignores the different synergies that exist between its various components (Dženopoljac et al , 2016).…”

Section: Measuring Corporate Governance Intellectual Capital and Corporate Performancementioning

confidence: 99%

“…Numerous quantitative and qualitative benchmarking methods have been proposed for assessing corporate performance. On the one hand, numerous studies (Goh, 2005; Tan et al , 2007; Shahwan, 2015; Dženopoljac et al , 2016; Shahwan and Habib, 2020) support the use of financial performance measures including ROAs, return on equity, TQ, net margin, asset turnover, return on invested capital and market-to-book ratio for quantifying firm performance. On the other hand, qualitative techniques including the quality of life for workers, innovative capability, the firm’s global agility, the firm’s global innovation, security measures and entrepreneurial orientation have been adopted for assessing firm performance (Mehdivand et al , 2012; Ling, 2013; Wang and Chen, 2013; Saeed et al , 2015).…”

Section: Measuring Corporate Governance Intellectual Capital and Corporate Performancementioning

confidence: 99%

“…In the context of corporate governance practices in Egypt, much effort has been exerted to develop these practices and deepen their implementation in the Egyptian context since the joint project between the World Bank and the Ministry of Foreign Trade in 2001 (Shahwan and Habib, 2020). The empirical evidence of this project was considered a cornerstone in issuing the first draft of the Egyptian CG code in 2005 as a voluntary code.…”

Section: Introductionmentioning

confidence: 99%

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

Shahwan

Fathalla

2020

IJOES

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Purpose This paper aims to investigate the impact of intellectual capital (IC) as a mediator variable on the association between corporate governance (CG) practices and firm performance. This study also examines bi-causality linkages between these variables. Design/methodology/approach The designated corporate governance index and the value-added intellectual coefficient method were used to assess the level of CG practices and the performance of IC. Tobin’s Q (TQ) and operating efficiency ratio were used to measure firm performance. Findings The aggregate CG score has a significant positive impact on the IC and the two measures of firm performance. However, the IC has only a partial mediation effect on the relationship between the aggregate corporate governance score and a firm’s operational efficiency ratio. The IC has partial and full mediation effects in the relationship between the sub-dimensions of corporate governance and the performance of Egyptian corporates. Moreover, a bi-causality relationship can be observed between CG and TQ. Research limitations/implications Generalizing the obtained results would require the sample size to be extended. Practical implications The findings should alert legislative institutions and practitioners of the need to comply with good CG practices and develop the efficiency of IC to elicit a firm’s superior performance. Originality/value This study is one of the first attempts to investigate the causality relationships and the mediation impact of IC on the relationship between CG practices and corporate performance in the Egyptian context.

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Section: Measuring Corporate Governance Intellectual Capital and Corporate Performancementioning

confidence: 99%

Section: Measuring Corporate Governance Intellectual Capital and Corporate Performancementioning

confidence: 99%

Section: Measuring Corporate Governance Intellectual Capital and Corporate Performancementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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

Shahwan

Fathalla

2020

IJOES

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“…Corporate governance (CG) and ownership structure issues and their impact on a firm’s performance have attracted significant research over the years (Casavecchia, 2016; Kowalewski, 2016; Lattemann, 2014; Puni and Anlesinya, 2020; Shahwan and Habib, 2020; Liedong and Rajwani, 2017; Simpson, 2014). In the corporate finance realm, agency problems arise from the separation of ownership and control is well-documented in terms of its effects (Jensen and Meckling, 1976).…”

Section: Introductionmentioning

confidence: 99%

Corporate governance, ownership structure and firms’ financial performance: insights from Muscat securities market (MSM30)

Queiri

Madbouly

Reyad

et al. 2021

JFRA

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Purpose The purpose of this study is to investigate the relationship between selected board characteristics and ownership elements and the performance of firms listed in the Muscat Securities Market (MSM30). The examination focused on how the firm financial performance was affected by the board size, the number of board meetings and the ratio of the independent board of directors along to the ownership concentration types (i.e. institutional, state and concentrated individual ownership). Design/methodology/approach Data were extracted from the annual reports available online on the MSM30 website over a period of seven years (2009–2015). The sample consisted of 14 firms belonging to the non-financial sector. The data were of a balanced type and there were 98 observations. The analysis was conducted using the ordinary least square in STATA with the use of the robustness technique of standard error. Findings The findings of this study provide evidence that the selected elements for board characteristics and ownership influence firm performance. Nevertheless, such influence has its interpretation that differs to some extent from other securities markets in the developing countries. For instance, the ratio of the independent board of directors, the number of board director’s meetings, state ownership and concentrated individual ownership were inversely affecting the firm performance. However, institutional ownership and board size were found to have a positive effect on firm performance. Originality/value Studies on the influence of corporate governance and ownership structures in the context of Oman are still scarce. MSM30 received little attention, even though such an index encompasses the most liquid and the most profitable firms. MSM30 is an important index for investors in Oman looking for capital gains. Accordingly, this present study contributes to the knowledge body by providing new findings related to Oman and compares it with the other markets within Gulf Council Countries (GCC) and around the world. This will provide more understanding of the Omani context. Moreover, the authors anticipate that the outcomes of this research, which so far is the most comprehensive study in the Omani context in terms of the impact of corporate governance and ownership structure on firm financial performance can significantly shape corporate governance discourse, practices and policies in Oman, in particular, and in other GCC countries in general, to improve financial performance and corporate sustainability.

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Can intellectual capital contribute to financial and non‐financial performances during normal and crisis situations?

Lestari

Adhariani

2022

Bus Strat Dev

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The contribution of intellectual capital (IC) on financial performance have been found in previous studies but whether IC can also be utilised to improve non‐financial performance has been understudied; let alone the contributions in different economic conditions (normal and crisis periods). This study aims to provide empirical findings to answer these issues by defining non‐financial performance in terms of the environmental, social, and governance (ESG) performance and COVID‐19 pandemic to represent the crisis. Non‐financial companies listed on stock exchanges in the Southeast Asia countries that are member of ASEAN (Association of Southeast Asian Nations) were selected as the samples for the research period of 2016–2020. The results show that the IC has a positive association with financial performance but a negative relationship with ESG performance. With the COVID‐19 pandemic as the moderating variable, the results show that the pandemic period is not found to moderate the effect of the IC on financial performance and ESG performance. These results indicate that under normal conditions prior to the economic crisis caused by COVID‐19, companies in Southeast Asia prioritised the use of IC to improve financial performance. Meanwhile, during the COVID‐19 pandemic, companies in the region have not utilised IC to improve their financial and non‐financial performance. The findings that IC affect ESG performance negatively need a serious attention amid the increasing awareness of sustainability and the expected role of corporate in the achievement of the Sustainable Development Goals (SDGs).

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Does the efficiency of corporate governance and intellectual capital affect a firm's financial distress? Evidence from Egypt

Cited by 86 publications

References 138 publications

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

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

Corporate governance, ownership structure and firms’ financial performance: insights from Muscat securities market (MSM30)

Can intellectual capital contribute to financial and non‐financial performances during normal and crisis situations?

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