Corporate governance and firm performance: The moderating role of intellectual capital in Iraq listed companies

Corporate governance issues have been the focus of attention for researchers for over three decades due to the global economic crisis. Despite the well-established relationship between corporate failure and corporate governance, there is still a lack of studies on corporate governance mechanisms and firm performance in the absence of a code for corporate governance in Iraq. Therefore, this study aimed to examine the relationship between the board of directors' characteristics and ownership structure, the firm performance of companies, and the intellectual capital variable as a moderating effect. This study utilized secondary data from 2015 to 2019 for the listed companies in Iraq. This study employs the agency theory, resource dependence theory, and resource-based theory to investigate the relationship between the variables. The sample of the study was 46 companies for 230 firms’ observations based on the balanced panel data. This study employed STATA in running the Panel Corrected Standard Errors (PCSE). This study found positive and significant relationships between board size, board meeting, board change, institutional ownership, block shareholders ownership, and Tobin’s Q as a measure of performance of the firm. However, for the second measurement of firm performance using ROA, the results showed a positive and significant relationship between board size, board meeting, board change, managerial ownership, institutional ownership, and block shareholders ownership. The results for interaction variables found that intellectual capital moderates the relationship between most of the board characteristics, ownership structure variables, and firm performance. The acceptance of most hypotheses related to board characteristics and ownership structure underscores their necessity during the formulation of corporate governance policy. These findings can be used by the governance and regulatory bodies to develop the code of Iraq’s corporate governance. Future research can employ comparative studies among Middle East countries to provide more robust findings that may be generalized across countries.