Environmental, Social, and Governance Information Disclosure and Intellectual Capital Efficiency in Jordanian Listed Firms

Abstract

In this study, we explore the association between the intellectual capital (IC) efficiency of firms and their voluntary disclosure of environmental, social, and governance (ESG) information, using data on Jordanian listed firms and the value-added intellectual coefficient (VAIC) model with its three components of human, structural, and relational capital efficiency (HCE, SCE, and RCE, respectively). We find that disclosing environmental information is unrelated to IC efficiency, that disclosing governance information is associated with raised IC efficiency through the HCE and RCE components, and that disclosing social information is negatively associated with IC efficiency through the SCE and RCE components. We also find that releasing information on one or two of the three ESG dimensions has a positive effect on IC efficiency. This evidence has implications for the management of intangible assets.

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

“…In addition, companies that invest in ESG carry out ethical investment practices and can increase returns (Broadstock et al, 2021), which can affect their sustainability and that of their investors. In addition, several recent studies such as those of Reboredo and Sowaity (2022) and Tsai and Mutuc (2020) ASEAN is one of the most important players in the global trading system and had the fifth largest economy in the world before being hit by the COVID-19 pandemic (Elms, 2020). However, ASEAN countries experienced a 0.5% decline in regional growth in the first half of 2020the lowest since 1967 (Djalante et al, 2020).…”

“…In addition, companies that invest in ESG carry out ethical investment practices and can increase returns (Broadstock et al, 2021), which can affect their sustainability and that of their investors. In addition, several recent studies such as those of Reboredo and Sowaity (2022) and Tsai and Mutuc (2020) have observed a positive relationship between one or two IC components (by disclosing ESG performance) and ESG performance as a proxy for corporate social responsibility (CSR) performance. The positive influence of IC components on ESG performance can have an important role for companies to survive during the global financial crisis caused by the COVID‐19 pandemic.…”

“…The positive influence of IC components on ESG performance can have an important role for companies to survive during the global financial crisis caused by the COVID‐19 pandemic. However, to the best of the author's knowledge, no research has linked ESG performance with the COVID‐19 pandemic, and limited studies directly link IC with ESG performance (Reboredo & Sowaity, 2022; Tsai & Mutuc, 2020).…”

Intellectual Capital Efficiency and Corporate Performance in Jordanian Listed Companies

“…IC has been the focus of intense debate by researchers (e.g., Aljuboori et al, 2022), and is generally understood as an important driver of firm competitiveness and future value generation (Xu et al, 2022;Xu & Feng, 2020). In a knowledge-based economy, the importance of IC in value creation is attributed to its distinctive characteristics as a main driver of long-term corporate success, wealth, financial performance and sustainability (Xu & Li, 2019;Xu & Wang, 2018;Tarigan et al, 2019;Sardo & Serrasqueiro, 2017;Reboredo & Sowaity, 2022). Therefore, corporate management needs to pay attention to IC and to continuously invest in updating knowledge and staff skills (Haris et al, 2019).…”

How can organizations measure the integration of environmental, social, and governance (ESG) criteria? Validation of an instrument using item response theory to capture workers' perception

“…(Aboud & Diab, 2019;Alsayegh et al, 2020;Arayssi et al, 2020;Birindelli et al, 2018;Bravo & Reguera- Alvarado, 2019;Conca et al, 2021;De Masi et al, 2021;Garcia et al, 2017;Garcia & Orsato, 2020;He et al, 2021;Koroleva et al, 2020;Landi et al, 2022;L opez-Toro et al, 2021;Moneva et al, 2020;Nitescu & Cristea, 2020;Ortas et al, 2019;Ouni et al, 2020;Peng & Isa, 2020;Pirtea et al, 2021;Qureshi et al, 2020Qureshi et al, , 2021Rajesh & Rajendran, 2020;Reboredo & Sowaity, 2022;Romano et al, 2020;Sachin & Rajesh, 2021;Shahzad et al, 2021;Shakil, 2021;Sul & Lee, 2020;Terzani & Turzo, 2021;Ting et al, 2020;J. Xu et al, 2021;Zhang et al, 2020) …”