Mediating Effect of Intellectual Capital on Corporate Governance and Performance of Conglomerates in Nigeria

Abstract

Purpose: The nature of diversification in the form of conglomerates is the research theme for this study. Thus, CG’s functions on FP on conglomerates firms of Nigerian economy was studied while applying IC as the mediating variable. 
 Design/Methodology: This research depends on archival data collected from the NSE. Firms have been chosen based on the convenient sampling method and an important parameter for judgment is Conglomerated firms. In order to get genuine results, ten years of financial data have been taken into consideration. Multiple regression technique was used to analyze the data. The software used for analysis was STATA version 14.0.
 Results: The model I of the study disclose a pessimistic and insignificant impact of board size and board independence on IC using VAIC as a proxy. In contrast, model II results disclosed that the performance of the firms was impacted by the board’s size and institutional ownership. Implying that, the greater the size of the firm as well as more shares owned by institutional shareholders the higher the profit.
 Practical Implications: Nigeria being one of the growing economies now is dependent on knowledge assets and hence it has a positive effect on the firm’s performance. Conglomeration is seen even between employee’s skills of both industries, which give a positive outcome. Hence, firms under conglomerate tags have a strong impact in relation to intellectual capital.

Board Structure and Bank Performance: The Mediating Role of Intellectual Capital

“…Makki & Lodhi (2014), Nkundabanyanga (2016) and Bhattacharjee et al (2017) argue that board composition has a positive influence on company financial performance, as well as IC as a mediator. Bala et al (2019) confirm that board size and the independence of board members affect financial performance, with a mediating effect of IC. Iqbal & Zaib (2017) showed that in the banking sector, corporate governance reflected through the certain characteristics of the board has a significant positive impact on IC, and vice versa, i.e.…”

Does corporate governance spur bank intellectual capital in an emerging economy? A system GMM analysis from Ethiopia

“…In order to manage and make wise investments in IC, a large board is therefore useless [38]. Some other studies, such as the study of Asare et al [23], Bala et al [30], Ho and Williams [87,221], and Saruchi et al [181], show that the IC of banks does not depend on board size.…”

“…There are various variables used by different authors as control variables when studying the effect of corporate governance on intellectual capital. Three control factors have been employed to limit the effect of these factors on the intellectual capital of firms (size, leverage, and age) [14,29,30,51,118,137,202]. The control variables of the study are summarized in Table 2.…”

“…Enterprise size is one of the important factors contributing to the business performance of the enterprise [151]. Firm size has a significant positive relationship with firm performance [29,30,127]. Lari Dashtbayaz et al [118] and Adebayo et al [6] also found out that the size of the firm is positively and significantly related to its intellectual capital.…”

Diversity in Estimates of the Impact of Intellectual Capital on Firm Performance Created by Varied Adoptions of <i>VAIC</i> Method

“…ROA reflects the effectiveness of utilising available assets in creating profits. The ratio of operating profits to total assets is used to calculate it (Chen et al, 2005;Pal & Soriya, 2012;Bala, Raja, & Dandgo, 2019). ROE represents the return generated on common stocks of shareholders, and it is recognised as an important financial indicator for owners of the firm (Chen et al, 2005;Pal & Soriya, 2012;Kamath, 2015).…”