Does Intellectual Capital Disclosure Matter? Examining Its Role Between Corporate Governance and Firm Performance in an Emerging Market

Intellectual capital disclosure (ICD) is believed to enhance transparency and reduce information asymmetry, yet its voluntary nature raises questions about its effectiveness, particularly in emerging markets. This study investigates whether ICD mediates the relationship between corporate governance and firm performance in Jordan, an emerging market that mandated corporate governance reports in 2017. Using panel data from 391 firm-year observations (2021–2023) of firms listed on the Amman Stock Exchange, we employ pooled OLS regression with robust standard errors. Only three of eighteen hypotheses are supported. Board size significantly influences relational (RCD) and structural capital disclosures (SCD). Audit committee meetings influence RCD. However, no ICD component affects firm performance, and no mediation effects exist. The results indicate that ICD does not mediate the corporate governance-firm performance relationship. The findings question the effectiveness of voluntary ICD; this type of voluntary disclosure may be insufficient to achieve transparency goals in emerging markets. We argue that mandatory, standardized ICD requirements may be necessary to enhance comparability, reduce information asymmetry, and improve governance effectiveness. Regulators should consider piloting mandatory ICD reporting for large listed firms.