The Influence of Governance on Intellectual Capital in Textile Industry

This study is aimed to evaluate the impact of corporate governance index on intellectual capital performance by developing the index from five sub-indices and incorporating the value-added intellectual coefficient (VAIC) methodology for intellectual capital performance. Fixed and Random Effect Regression techniques have been used to analyze the data of the textile sector in Pakistan from 2010 to 2014. The findings suggest a negatively significant impact of corporate governance index on intellectual capital performance while sub-indices give mixed results. The study also investigates the relationship of individual variables in each sub-index with performance and results show a significant relationship for five variables namely independent director, independent audit committee, foreign shareholders ownership, gratuity, and remuneration committee.This study contributed empirical work in the literature of corporate governance and intellectual capital performance.The outcomes of this study can be used by policymakers as an attempt to boost the performance of the textile sector. A modified value-added intellectual coefficient (M-VAIC) methodology can be used in future research.