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Volume 7 - Number 1 | March 2023

Corporate board structures and intellectual capital: evidence from banks in Africa

Nicholas Asare, Francis Aboagye-Otchere, and Joseph Mensah Onumah

28/03/2023 92 0 0
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Corporate governance Intellectual capital Board structures Banks Africa.

Abstract:

Purpose
This study examines the nature of the relationship between board structures (BSs) and intellectual capital (IC) of banks in Africa.

Design/methodology/approach
Using annual data from financial statements of 366 banks from 26 African countries from 2007 to 2015, the study estimates IC using the value-added intellectual coefficient (VAIC) and BSs using board size, board independence and board gender diversity. The system generalized method of moments and panel-corrected standard error estimation strategies are used to estimate panel regressions.

Findings
There is a significant negative relationship between board independence and intellectual capital. The results also indicate that the IC of banks does not depend on board size and board gender diversity.

Practical implications
The study's findings provide evidence of the extent to which BSs have been instituted to support investments in intellectual capital as a means of improving the performance of banks in Africa.

Originality/value
This study provides some empirical evidence from Africa's banking sector to justify that banks with better IC have boards that are less independent. This study is one of the few studies that employs many countries' data.

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Further reading

  1. Garcı´a-Meca, E. and Martı´nez, I. (2005), “Assessing the quality of disclosure on intangibles in the Spanish capital market”, Business Review, Vol. 17 No. 4, pp. 305-313.
  2. Joshi, M., Cahill, D. and Sidhu, J. (2013), “Intellectual capital and financial performance: an evaluation of the Australian financial sector”, Journal of Intellectual Capital, Vol. 14 No. 2, pp. 264-285.
  3. Nkundabanyanga, S.K., Ntayi, J.M., Ahiauzu, A. and Sejjaaka, S.K. (2014), “Intellectual capital in Ugandan service firms as mediator of board governance and firm performance”, African Journal of Economic and Management Studies, Vol. 5 No. 3, pp. 300-340.
  4. Waweru, N. (2014), “Determinants of quality corporate governance in Sub-Saharan Africa: evidence from Kenya and South Africa”, Managerial Auditing Journal, Vol. 29 No. 5, pp. 455-485.

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