DefinePK

Research Objective

To assess the impact of corporate governance on intellectual capital disclosure in the context of Pakistan's listed textile firms.

Methodology

Conclusive research design using quantitative methods. Data was collected from the annual reports of 50 listed non-financial textile companies in Pakistan for the period 2016-2020. Corporate governance was measured by audit committee, CEO duality, board independence, and board size. Intellectual capital disclosure was measured using indices for relational capital, structural capital, and human capital. Regression analysis (Pooled OLS, Fixed Effect Model, Random Effect Model) was employed, with the Fixed Effect Model selected based on Hausman's test.

Methodology Flowchart

                        graph TD
    A["Data Collection from Annual Reports 2016-2020"] --> B["Data Cleaning and Preparation"]
    B --> C["Variable Identification: CG & ICD"]
    C --> D["Descriptive Statistics"]
    D --> E["Correlation Analysis"]
    E --> F["Regression Analysis"Pooled OLS, FEM, REM""]
    F --> G["Hausman's Test for Model Selection"]
    G --> H["Fixed Effect Model"FEM" Selected"]
    H --> I["Analyze FEM Results for HC, SC, RC"]
    I --> J["Interpret Findings and Draw Conclusions"]                    

Discussion

The study highlights that while some corporate governance mechanisms (board independence, firm size) influence human capital disclosure, and others (board size, firm size, financial leverage) influence structural capital disclosure, none significantly impact relational capital disclosure in Pakistani textile firms. This suggests varying levels of influence of governance structures on different components of intellectual capital disclosure. The findings also indicate that firm size is a significant factor in both human and structural capital disclosure.

Key Findings

Board independence has a significant negative impact on human capital, while firm size has a positive impact. Board size and firm size have a significant negative impact on structural capital, while financial leverage and firm size have a significant positive impact. All corporate governance measures have an insignificant impact on relational capital.

Conclusion

The study concludes that corporate governance mechanisms have a differential impact on various dimensions of intellectual capital disclosure among listed textile firms in Pakistan. Specifically, board independence and firm size are key determinants of human capital disclosure, while board size, firm size, and financial leverage affect structural capital disclosure. Relational capital disclosure appears less influenced by the examined corporate governance factors. The findings contribute empirical evidence from an under-researched geographical context.

Fact Check

1. Data Period: The study collected data for the period between 2016 and 2020. (Confirmed in Methodology and Conclusion)
2. Sample Size: A total of 50 textile firms were employed in the study. (Confirmed in Methodology and Conclusion)
3. Key Finding on Human Capital: Board independence has a significant negative impact on human capital. (Confirmed in Key Findings and Conclusion)

Mind Map