In this knowledge economy, there is a gradual shift in focus from capital and labor intensive firms to knowledge intensive firms. This paper focuses on the corporate governance and disclosure practices of firms listed on Bombay Stock Exchange (BSE). The sample firms represent different sectors of Intellectual Capital (IC) intensive firms segregated according to types of IC (viz., human capital, structural capital and relational capital). These sectors are characterized by large investment in intangible or knowledge assets with relatively small proportion of tangible assets in their asset base. This research calculates IC intensity ratio for sample firms, and studies its impact on the corporate governance and disclosure practices of firms. By analyzing the key characteristics of these IC intensive industries and subsequently studying the impact of the nature of industry (i.e. IC intensive firms) and types of IC on the corporate governance and disclosure practices, this research identifies and tests the empirical evidence for such relationship.

Corporate governance involves a diverse set of relationships between management of firm, its board, its shareholders and other stakeholders. Corporate governance provides an ethical process as well as a well-defined structure through which the objectives of the firm, the means of attaining such objectives, and systems of monitoring performance are also set. Corporate governance is about commitment to values, ethical business conduct, and transparency and makes a distinction between personal and corporate funds in the management of a firm.

In the past, the corporate value was mostly measured by the tangible assets reflected in the book value of the companies. Traditionally land, labor and capital were considered to be most valuable assets in economics. The traditional industries, as it is referred to, constitute industries that were mainly dependent on visible physical assets and hence are more capital intensive. However, there is a gradual shift in focus from capital and labor intensive firms to knowledge intensive firms. Starbuck (1992) suggests that term ‘knowledge intensive’ can be applied to firms in which knowledge has more importance than other inputs (i.e., capital and labor), and human capital, as opposed to physical or financial capital, dominates. In the knowledge-based industries numerous corporate organizations have utilized intangible assets (Intellectual Capital or IC) for their competitive advantage to create corporate value.

Corporate Governance Journal, Bombay Stock Exchange (BSE), IT (Information Technology), Fast Moving Consumer Goods (FMCG), Corporate Governance, Disclosure Practices, Firms, Impact of Nature, Intellectual Capital (IC).