Analysis of mediating effect of intellectual capital efficiency linking board of directors' characteristics and firm performance : Empirical evidence from thai listed companies

Abstract

This study aimed to investigate the mediating effects of intellectual capital efficiency linking board of directors’ characteristics and firm performance. The board of directors’ characteristics consisted of the number of board of directors, the number of audit committee directors, the proportion of independent directors, the proportion of women sitting as board of directors, the frequency of board meetings, the frequency of audit committee meetings and the number of firms with separate chairman and CEO. Intellectual capital efficiency has been estimated using Value Added Intellectual Capital (VAIC) methodology. The samples used in this study were Thai listed non-financial companies in 2014. The data were analyzed by using Structural Equation Modeling (SEM) to determine the model test.

The results of this study revealed that the number of board of directors and the frequency of audit committee meetings had positive effect on the intellectual capital efficiency. Moreover, the proportion of women sitting as board of directors and the frequency of audit committee meetings had positive effect on the firms’ performance. Apart from this, the intellectual capital efficiency had full mediating effect on the number of board of directors and firm performance. In addition, the intellectual capital efficiency had partial mediating effect on the frequency of audit committee meetings and firm performance. However no influence revealed on the number of audit committees, and firm with separate chairman and CEO in relation with the firm performance through the intellectual capital efficiency.

The findings of this study are important to regulators, investors, academics, and others who have contention that the board of directors’ characteristics and firm performance are important for increasing intellectual capital efficiency. In the stock exchange, with the numbers of recent regulations focusing on corporate governance, there is a widely held view that better corporate governance is associated with better firm performance, and thus, increase intellectual capital efficiency.