Intellectual capital investment and value creation of listed financial firms in Nigeria
Keywords:
Intellectual Capital Investments, Listed Financial Firms, Nigeria, VAIC, Value CreationAbstract
This study investigated the effect of investments in intellectual capital on the value creation of financial firms listed on the Nigeria Exchange Group over an 18-year period (2006-2023). The study investigates specifically, the influence of human capital efficiency and relational capital efficiency on return on assets and earnings per share, while taking into account the size and age of the banks under review. The study utilized an ex post facto research design, drawing on secondary data obtained from the annual reports of the sampled companies. Purposive sampling technique was employed to select 12 banks from a total of 22. The investigator conducted assessments of data reliability and validity to ascertain the causal relationship among the variables. The findings of the study indicated that Relational Capital Efficiency (RCE) exhibits a positive yet statistically insignificant correlation with earnings per share, alongside a negative and also statistically insignificant correlation with return on assets for listed banks in Nigeria, with p-values of 0.4111 and 0.4907, respectively, at the p< and >0.05 level of significance. The efficiency of human capital demonstrated a noteworthy and statistically significant effect on both earnings per share and return on assets for the banks examined, with p-values of 0.0001 and 0.0391, respectively, at p<0.05 level of significance. The research findings indicated that the elements of intellectual capital significantly influence the value creation of publicly listed banks in Nigeria. It is recommended that these banks incorporate their investments in intellectual capital within their annual reports, as this could enhance their financial robustness.
References
Adegbie F. F., Akintoye I. R., and Olusanjo O. R, (2019). Effect of integrated reporting practices on corporate disclosure and transparency in Nigerian quoted manufacturing companies’. EPRA International Journal of Economic and Business Review, 7(6).
Tarigan J., Listijabudhi S., Hatane S. and Widjaja D. (2019). “The Impacts of Intellectual Capital on Financial Performance: Evidence from Indonesian Manufacturing Industry. Indonesian Journal of Business and Entrepreneurship, 5, 64-76. http://journal.ipb.ac.id/index.php/ijbe https://doi.org/10.17358/ijbe.5.1.65
Adhariani, D. & de Villiers, C. (2018). Integrated reporting: perspectives of corporate report preparers and other stakeholders. Sustainability Accounting, Management and Policy Journal, October. https://doi.org/10.1108/SAMPJ-02-2018-0043
Hendri S., and. Puteri K. (2015). “Impact of corporate governance on corporate environmental disclosure: Indonesian evidence”, International Conference on Trends in Economics, Humanities and Management (ICTEH’ 15), August 12 – 13, Pattaya (Thailand).
Ofoegbu G. N., Odoemelam N., and Okafor R.. (2018). “Corporate board characteristics and environmental disclosure quantity: Evidence from South Africa (integrated reporting) and Nigeria (traditional reporting)” Cogent Business & Managment 5(1):1-27. DOI:10.1080/23311975.2018.1551510
Hussain N., Alucha M., and, Roszkowska-Mendes N. (2019). “Integrated reporting narratives: the case of an industry leader. Sustainability”, 11, 976. Doi: 10.3390/su11040976
IIRC. (2021). The international integrated reporting framework. http://www.theiirc.org/wp- content/uploads.
Akintoye I.R (2019). “Accounting: a mismanaged concept requiring urgent redefinition”. Being the 28th Inaugural Professorial lecture at the Babcock University, Ilisan on April 4.
Zhang X.., Duc T., Mutuc E.B., and Tsai F.. (2021). Intellectual capital and financial performance: comparison with financial and pharmaceutical firms in Vietnam, Frontiers in Psychology, 12, 1-10. https://doi.org/10.3389/fpsyg.2021.595615
Salman T. R and Abogun S.. (2024). “Intellectual Capital and Market Performance of Nigerian firms”. Copernican Journal of Finance & Accounting. Online. 21 January 2024. 12(2), 59-78.
Velte, P., & Stawinoga, M. (2017). Integrated Reporting: The Current State of Empirical Research, Limitations and Future Research Implications. Journal of Management Control, 28, 275-320. https://doi.org/10.1007/s00187-016-0235-4
Sardo, F.; Serrasqueiro, Z. (2017) An European empirical study of the relationship between firmsʹ intellectual capital, financial performance and market value. J. Intellect. Cap. 2017, 18, 771–788.
Nadeem M., Dumay J. and Massaro M.. (2019). “If you can measure it, you can manage
it”: a case of intellectual capital. Australian Accounting Review, 29 (2), 395–407. https://doi.org/10.1111/auar.12227
Drehmann M., and Juselius M. (2014): "Evaluating early warning indicators of banking
crises: Satisfying policy requirements", International Journal of Forecasting, vol 30, no 3, 759-780.
Oko, J. O., Onodi, B. E., & Tapang, A. T (2018). Effect of Intellectual Capital Management on Revenue Generation of Listed Commercial Banks in Nigeria. Journal of accounting and Financial Management, 4(6), 5 6-80.
Hidayah, O. (2018). Human capital and performance and workers’ productivity in some selected Nigerian universities. 1st DBA-Africa Management Review International Conference 20th March, (2018)
Gapenski B.., and Brigham E., (2017) “Introduction to financial management. United States of America”: The Dryden Press. (2017).
Gupta K.., Goel S., Bhatia P.. (2020). Intellectual capital and profitability: evidence from Indian pharmaceutical sector. Vision 24, 204–216. doi: 10.1177/0972262920914108 [CrossRef] [Google Scholar]
Asare N., Margaret M. L,. Joseph M. O and Michael, E. A. (20201 Intellectual capital and asset quality in an emerging banking market. Asian Journal of Accounting Research, 6(1), 55-68.. http://dx.doi.org/10.1108/AJAR-05-2020-0034
Abhayawansa, S., & Guthrie, J. (2016). Does intellectual capital disclosure in analysts' reports vary by firm characteristics?. Advances in accounting, 35, 26-38.
Yousaff M., (2022). Intellectual capital and financial performance” evidnece from certified firms with EFQM excellence model, Total Quality Management and Business Excellence, 33(13-14), 1472-1488. https://doi.org/10.1080/14783363.2021.1972800.
Hameed A. A. and. Anwar K. (2018). “Analyzing the Relationship between Intellectual Capital and Organizational Performance’: A Study of Selected Private Banks in Kurdistan. International Journal of Social Sciences & Educational Studies, 4(4), 39.
Eka C., Mirna I.and Mulia S.. (2019). :Effects of intellectual capital to financial performance and value of companies listed in Indonesia Stock Exchange”. Account and Financial Management Journal, 3(2), 1323-1330.
Noor M., D., Nordin D., Mohd R., Rahim A.., Sakinah S., and Shaikh D.. (2021). the Mediation Effect of Strategic Leadership in the Relationship between Knowledge Management, Competitive Intelligence and Business Strategy Formulation”. Journal of Contemporary Issues in Business and Government, 27(1), 2271-2285.
Özmen H. I. (2018). The Achilles’ Heel of Strategic Management: Strategic Leadership in a Chaotic Environment. In International Symposium on Chaos, Complexity and Leadership (pp. 123-135). Springer, Cham.
Sedeaq N., (2018). The impact of intellectual capital on firms’ performance of Turkish real estate companies before and after the crises. European Scientific Journal, 14(1), 29-45. https://doi.org/S10.1108/00242531111100531
Amrizah K.,, and Rashidah A. R., (2013). Intellectual capital profiles : Empirical evidence of Malaysian companies. International Review of Business Research Papers, 9(6), 83–101. Retrieved from http://irbrp.com/static/documents/November/2013/6. Amrizah.pdf
Adegboyegun A. E., Alade M. E., Ben-Caleb E., Ademola A. O., Eluyela D. F., and, Oladipo O. A.. (2020) “Integrated reporting and corporate performance in Nigeria: Evidence from the banking industry”. Cogent Business & Management, 7(1).. http://dx.doi.org/10.1080/23311975.2020.1736866
Dubo K. C. T, and Agomor P. E.. . (2021). “Intellectual capital and performance among listed non-financial firms in west Africa”. Dataking Working Paper Series N° WP2021-03-02DOI:10.2139/ssrn.3803094.
Acheampong A. O (2019) Modelling for insight: does financial development improve environmental quality? Energy Econ 83:156–179
Kamath, G. B. (2015). Impact of Intellectual Capital on Financial Performance and Market Valuation of Firms in India. International Letters of Social and Humanistic Sciences, 48, 107-122. https://doi.org/10.18052/www.scipress.com/ILSHS.48.107
Utami, M. E. (2018). “The Intellectual Capital Components on Firm Value”: Evidence from LQ-45 Index Companies. Jurnal Keuangan dan Perbankan, 22 (2), 291-300.
Cosma, S., Soana, M. G., & Venturelli, A. (2018). Does the market reward integrated report quality? African Journal of Business Management, 12(4), 78–91. http://doi.org/10.5897/AJBM2017.8469.
Enekwe C.I.., Udeh S.N. and Okwo I.M. (2022). Effect of “Intellectual Capital on Financial Performance of listed Consumer Goods Companies in Nigeria”. European Journal of Accounting, FinanceandInvestment8 (06), 10 –26.
Haruna D., (2021). “Effect of Intellectual Capital on Performance of Multinational. Bingham University Journal of Accounting and Business, 150-160.
Solanke A. A. & Mohammed I. Y. (2021). “Effect of intellectual capital on the performance of pharmaceutical firms. Umyu Journal of Accounting and Finance Research, 1 (1), 148-160.
Rehman, A., Aslam, E., & Iqbal, A. (2021). Intellectual capital efficiency and bank performance: evidence from Islamic banks. Borsa Istanbul Review, 1-9.
Ewereoke V. (2018). “Effect of Intellectual Capital on Performance of Firms Listed on Nigeria Stock Exchange”. Research Journal of Finance and Accounting, 9(8), 138-150.
Farneti F., Casonato F., Montecalvo M.,, and, de Villiers C.. (2019). “The influence of integrated reporting and stakeholder information needs on the disclosure of social information in a state-owned enterprise”. Meditari Accountancy Research, 27(4), 556–579. https://doi.org/doi.org/10.1108/MEDAR-01-2019-0436
Aluwong D. B. (2022). “Intellectual Capital Performance of Non-Finance Firmsin Nigeria European Journal of Business and Innovation Research 10, (1), 1-1
Tangngisalu J. (2021). ‘The impact of intellectual capital on company value. Jurnal Manajemen Bisnis, 8 (1), 182190.
Eneizan B. M and Ali M. (2018). “.Determinants of Financial Performance in the Industrial Firms: Evidence from Jordan”. Asian Journal of Agricultural Extension, Economics & Sociology, 22(1), 1-10.
Ousama, A.A, Hammami, H. and Abdulkarim, M. (2020). Association between intellectual capital and financial performance of Islamic banking industry: An analysis of GCC banks. International Journal of Islamic and Middle Eastern Finance and Management 13(1)
Aljuboori Z. M.,, Singh H.,, Hadad H.,, , Al-Ramahi N. M., and. Ali. M. A (2022).. “Intellectual Capital and Firm Performance Correlation”: The Mediation Role of Innovation Capability in Malaysian Manufacturing SMEs Perspective Sustainability, 14,154.
Published
How to Cite
Issue
Section
Copyright (c) 2024 Joan Onyinyechi Njoku, Grace Nyereugwu Ofoegbu, Ajuh Ali Iteh, Nkiruka Claris Chukwu
This work is licensed under a Creative Commons Attribution 4.0 International License.
Allows users to: distribute and copy the article; create extracts, abstracts, and other revised versions, adaptations or derivative works of or from an article (such as a translation); include in a collective work (such as an anthology); and text or data mine the article. These uses are permitted even for commercial purposes, provided the user: gives appropriate credit to the author(s) (with a link to the formal publication through the relevant URL ID); includes a link to the license; indicates if changes were made; and does not represent the author(s) as endorsing the adaptation of the article or modify the article in such a way as to damage the authors' honor or reputation. CC BY
