INTELLECTUAL CAPITAL, CORPORATE GOVERNANCE AND FINANCIAL PERFORMANCE OF QUOTED NON-FINANCIAL COMPANIES IN NIGERIA (2007-2017)
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Date
2019
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Abstract
The study analysed the trend and pattern of intellectual capital among quoted non-financial
companies in Nigeria and evaluated the extent of corporate governance practices among quoted
non-financial companies in Nigeria. It also examined the effect of intellectual capital on
performance measures of quoted non-financial companies in Nigeria and investigated the
moderating role of corporate governance on the relationship between intellectual capital and
performance. These were with a view to providing information on the extent to which corporate
governance strengthens the relationship between intellectual capital investment and financial
performance of firms in Nigeria.
Secondary data were employed for this study. Purposive sampling technique was used to select a
sample of 50 companies out of the total population of 80 non-financial quoted companies whose
stocks were actively traded on the Nigerian Stock Exchange for the period of 2007 to 2017 and
whose data on relevant information were readily available and accessible. The choice of base
year 2007 was informed by global economic recession that affected the financial performance of
quoted non-financial companies in Nigeria. Data on intellectual capital and corporate
governance such as human capital, structural capital, capital employed, board characteristics,
ownership structure and firms’ economic data were sourced from the audited financial
statements of sampled companies. Data collected were analysed using tables, percentages,
content analysis and regression analysis.
The results revealed that the trend and pattern of intellectual capital among quoted
non-financial companies in Nigeria vary ranging from -1.59 (Human Capital Efficiency), -0.81
(Structural Capital Efficiency) and -11.40 (Capital Employed Efficiency) to 428.43 (Human Capital Efficiency), 343.51(Structural Capital Efficiency) and 151.5 (Capital Employed
Efficiency) across sectors and period. The result also showed that the extent of corporate
governance practices among quoted non-financial companies in Nigeria as at 2017 was low at an
average of 34.84%. Furthermore, the result revealed that human capital efficiency (t
= 3.1319, p < 0.05), capital employed efficiency (t = 6.7011, p < 0.05), firm size (t = 2.2177, p
< 0.05) had significant effect on return on equity while capital employed efficiency
(t = 13.5989, p < 0.05) and leverage (t = 4.7112, p < 0.05) had significant effect on return on
assets. Finally, the result showed that human capital efficiency (t = 2.1617, p < 0.05), structural
capital efficiency (t = 2.3288, p < 0.05), capital employed efficiency (t =12.9183, p < 0.05) and
leverage (t = 2.5309, p < 0.05) had significant effects on return on assets while corporate
governance had moderating effect on the relationships between intellectual capital and the firm
performance through the capital employed efficiency (t = 2.7389, p < 0.05), human capital
efficiency (t = 2.2293, p < 0.05) and structural capital efficiency (t = 2.1051, p < 0.05).
The study concluded that corporate governance moderated the effect of investment in intellectual
capital on financial performance in Nigeria.