The Impact of Intellectual Capital and Board Diversity on Financial Performance: Evidence from Jordanian Industrial Listed Companies

Abstract

This research aims to examine the effect of intellectual capital (IC) and board diversity on the financial performance of Jordanian industrial listed firms. In this study, we utilize data from 28 firms listed in the Amman Stock Exchange for the years 2014-2023 to estimate IC and its parts using the MVAIC model. The results presented in this study indicate that overall IC has a significant positive relationship with firm financial performance, with CE and HC having the most significant positive effects, while SC has a positive but less significant impact. On the other hand, relational capital (RC) has no impact on financial performance. We also look at the moderating effect of board diversity in terms of gender, experience, professional background, and education. Our empirical analysis proves that gender diversity, professional background diversity and educational background supports the link between intellectual capital and firm value. However, experience diversity seems to have a slightly negative moderating influence on the relationship between intellectual capital and performance. These results extend the knowledge of IC and corporate governance in emerging markets and provide valuable information for managers and policymakers in Jordan and other similar economies about the role of IC management and board composition in improving the performance of firms.