The Influence of Corporate Governance on Firm Performance: Intellectual Capital as A Mediating Variable in Listed Mining Companies (2021-2024)

Purpose: This study examines the relationship between Corporate Governance (CG) and Firm Performance (FP) and investigates the mediating role of Intellectual Capital (IC). Focusing on mining companies listed on the Indonesia Stock Exchange during 2021–2024, the study explores whether intellectual capital helps explain the relationship between governance mechanisms and firm performance in a capital-intensive industry. Design/methodology/approach: This quantitative study uses purposive sampling to select 22 mining companies listed on the Indonesia Stock Exchange, yielding 88 firm-year observations for 2021–2024. The data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) with WarpPLS 8.0. Corporate Governance is represented by ownership structure and board characteristics. Intellectual Capital is assessed through Human Capital Efficiency (HCE), Structural Capital Efficiency (SCE), and Relational Capital Efficiency (RCE). Firm Performance is measured using Return on Assets (ROA), Return on Equity (ROE), and Net Profit Margin (NPM). Findings: The results show that CG has a positive and statistically significant relationship with FP (β = 0.185, p = 0.035). However, CG has a negative and statistically significant relationship with IC (β = −0.260, p = 0.005), contrary to the hypothesized positive direction. IC has a positive but statistically insignificant relationship with FP (β = 0.051, p = 0.316). Furthermore, the indirect effect of CG on FP through IC is negative and statistically insignificant (β = −0.013, p = 0.431). Thus, the results do not provide sufficient statistical evidence to support IC's proposed mediating role. The model assessment also indicates limited explanatory power, suggesting that other factors may contribute to variation in mining companies’ financial performance. Practical implications: Mining companies should strengthen governance practices while evaluating how they develop and use intellectual capital. Managers should not assume that investments in human, structural, and relational resources automatically produce immediate financial gains. Instead, they should assess how these resources are integrated into organizational processes and business strategies. Industry stakeholders may also consider initiatives that build knowledge and strengthen organizational capabilities. Originality/value: This study contributes sector-specific evidence on the relationship among CG, IC, and FP in an emerging market. Its findings highlight the negative association between CG and IC and the lack of statistically significant evidence for the proposed indirect effect. The study also emphasizes the importance of considering additional explanatory factors when examining governance and financial performance in the mining sector.