EFFECT OF INTELLECTUAL CAPITAL ON FINANCIAL PERFORMANCE OF INDUSTRIAL GOODS COMPANIES IN NIGERIA
Abstract
This study examines the effect of intellectual capital on financial performance of listed industrial goods companies in Nigeria for ten years’ period 2008 to 2018 by adopting Pulic model of IC known as value added intellectual coefficient (VAIC). Secondary data were used; multiple Regression models were used to test the hypotheses of the study where the results show that there was positive significant influence of IC on financial performance. Specifically, the results showed that structural capital efficiency and capital employed efficiency influence the financial performance of industrial goods companies. Human capital efficiency was not significant but has a positive contribution to return on asset. This study recommends that companies in Nigeria should invest in development of their intellectual capital as a key driver of firm's performance. The study also suggeststhat there is a need to have a separate department called IC department in all organization so that clear and proper records of all components of IC could be kept by the organization.
References
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Ahmad Z, Abdullah NMH, Roslan S (2012) Capital Structure Effect on Firms Performance: Focusing on Consumers and Industrials Sectors on Malaysian Firms. International Review of Business Research Papers 8: 137-155.
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Amin S, Aslam S, Makki MAM (2014). Intellectual capital and performance of pharmaceutical firms in Pakistan. Pak. J. Soc. Sci. 34(2):433-450. Retrieved from
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Anuonye NB (2015). Intellectual capital measurement: using the earnings per share model of quoted insurance companies in Nigeria. Int. Bus. Manage. 10(1):88-98.
Appauhami, B.A (2015). The impact of Intellectual capital on investors capital, gains on shares: An empirical investigation of Thai Banking, Finance and Insurance Sector; International Management Review, 3(2),14-25
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Appuhami R, Bhuyan M (2015). Examining the influence of corporate governance on intellectual capital efficiency Evidence from top service firms in Australia. J. Intell. Capital 30(4/5):347-372.
Arslan M, Zaman R (2014). Intellectual performance: A study of oil and gas sector of Pakistan.
Int. Letters Soc. Humanistic Sci. 43:125-140.
Asare N, Simpson SNY, Onumah JM (2013). Exploring the disclosure of intellectual capital in Ghana: Evidence from listed companies. J.Account. Market. 2(3).
Badar R, Saeed A (2013) Impact of Capital Structure on Performance Empirical Evidence from Sugar Sector of Pakistan. European Journal of Business and Management 5: 78-86.
Banimadh, B., Mohammadrezaei, F. and Mohammadrezaei, M.(2012). The Impact of Intellectual capital on profitability, productivity and market valuation: Evidence from Iranian high-knowledge based industries; Journal of Basic and Applied Scientific Research. 2(5) 4477- 4484.
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Broring S, Cloutier LM (2016). Value-creation in new product development within converging value chains: An analysis in the functional foods and nutraceutical industry. Brit. Food J. 110(1):76-97.
Chan KH (2011). Impact of intellectual capital on organizational performance: An empirical study of companies in the Hang Seng Index. Learn. Org. 16(1):22-39.
Chen MC, Cheng SJ, Hwang Y (2005). An empirical investigation of the relationship between intellectual capital and firms’ market value and financial performance. J. Intellect. Capital. 6(2):159-176.
Chinaemerem OC, Anthony O (2012). Impact of capital structure on the financial performance of Nigerian firms. Arabian J. Bus. Manage. Rev. 1(12):43-61.
Choudhury J (2010). Performance impact of intellectual capital: A study of Indian IT Sector. Int.
J. Bus. Manage. 5(9):72-80.
Clarke M, Seng D, Whiting RH (2011). Intellectual capital and firm performance in Australia. J. Intellect. Capital. 12(4):505-530.
Dadashinasab M, Sofian S (2014). The impact of intellectual capital on firm financial performance by moderating of dynamic capability. Asian Soc. Sci. 10(17):93-100.
Dahiyat, A. (2016). Does Liquidity and Solvency Affect Banks Profitability? Evidence from Listed Banks in Jordan. International Journal of Academic Research in Accounting, Finance, and Management Sciences, Vol. 6, No. 1: 35-40.
Deep R, Narwal KP (2014). Intellectual capital and its association with financial performance: A study of Indian textile sector. Int. J.
Dewa, I. K. A. D. (2015). Effects of Financial Risk and Sales Growth on Profitability and Property Company Values. Journal of the Economic Studies Bulletin, Vol. 20, No. 2: 158-167.
Ekwe, M. C. (2016), the relationship between intellectual capital and Growth in revenue of deposit money banks in Nigeria. Research Journal of financial and Accounting 4 (12) 55-64.
El –Bannany, M (2016). A study of determinants of intellectual capital performance in banks the UK Case. Journal of intellectual capital, 9 (3), 487-498.
Ghozali, I. (2016). Application of Multivariate Analysis with program IBM SPSS 23, The Eighth Edition. Semarang: Publishers of Diponegoro University.
Gunde, Y. M., Murni, S., and Mirah, H. R. (2017). Analysis of the Effect of Leverage on Profitability in Food and Beverages Sub-Industry Manufacturing Companies Listed on the Indonesia Stock Exchange Period 2012-2015. EMBA Journal, Vol. 5, No. 3: 4185-
4194.
Abosede (2012) Pecking Order Theory of Capital Structure: Another Way to Look At It. Journal of Business Management and Applied Economics.
Ademola OJ, Kemisola OC (2014). Working capital management and profitability of selected quoted food and beverages manufacturing firms in Nigeria. European J. Accounting Auditing Finance. 2(3:10-21..
Ahangar, R.G (2011). The relationship between intellectual capital and financial performance An empirical investigation in an Iranian company. African journal of Business Management, 5(1), 88-95.
Ahmad Z, Abdullah NMH, Roslan S (2012) Capital Structure Effect on Firms Performance: Focusing on Consumers and Industrials Sectors on Malaysian Firms. International Review of Business Research Papers 8: 137-155.
Ahmadinia H, Javad A, Elham H (2012) A Comprehensive Review on Capital Structure Theories. The Romanian Economic Journal 15: 3.
Akpinar AT, Akdemir A (2002). Intellectual Capital. Dspace. Xmu.Edu.Cn. pp. 332-340.
Al-Musali MAK, Ismail KNIK (2014). Intellectual capital and its effect on financial performance of banks: evidence from Saudi Arabia.
Almusali .M. (2009). The influence of intellectual capital on financial performance of banks listed in Bahrain.
Al-shubiri FN (2013). The impact of value added intellectual coefficient components on financial health. Rev. Int. Comparative Manage. 14(962):459-472.
Amin S, Aslam S, Makki MAM (2014). Intellectual capital and performance of pharmaceutical firms in Pakistan. Pak. J. Soc. Sci. 34(2):433-450. Retrieved from
Amir, E., and Lev,B. (1996).Value relevance of non-financial information: The wireless communications industry. Journal of Accounting and Economics, 22 (1-3), 3-30.
Andriessen (2004). Sveiby 2001 and Roos 2005. Exploring the concept of intellectual capital (IC). Long Range Planning, 31(1), 150}153. Anne-Laure M, Nick B (2013). Intellectual capital and performance within the banking sector of Luxembourg and Belgium. J. Intell. Capital 14(2):286-309.
Anuonye NB (2015). Intellectual capital measurement: using the earnings per share model of quoted insurance companies in Nigeria. Int. Bus. Manage. 10(1):88-98.
Appauhami, B.A (2015). The impact of Intellectual capital on investors capital, gains on shares: An empirical investigation of Thai Banking, Finance and Insurance Sector; International Management Review, 3(2),14-25
Appuhami BA (2007). The impact of intellectual capital on investors’ capital gains on shares: An empirical investigation of Thai banking,finance & insurance sector. Int. Manage. Rev. 3(2):14-25.
Appuhami R, Bhuyan M (2015). Examining the influence of corporate governance on intellectual capital efficiency Evidence from top service firms in Australia. J. Intell. Capital 30(4/5):347-372.
Arslan M, Zaman R (2014). Intellectual performance: A study of oil and gas sector of Pakistan.
Int. Letters Soc. Humanistic Sci. 43:125-140.
Asare N, Simpson SNY, Onumah JM (2013). Exploring the disclosure of intellectual capital in Ghana: Evidence from listed companies. J.Account. Market. 2(3).
Badar R, Saeed A (2013) Impact of Capital Structure on Performance Empirical Evidence from Sugar Sector of Pakistan. European Journal of Business and Management 5: 78-86.
Banimadh, B., Mohammadrezaei, F. and Mohammadrezaei, M.(2012). The Impact of Intellectual capital on profitability, productivity and market valuation: Evidence from Iranian high-knowledge based industries; Journal of Basic and Applied Scientific Research. 2(5) 4477- 4484.
Barney J (1991). Firm resources and sustained competitive advantage. J. Manage. 17(1):99- 120.Berry J (2004). Tangible strategies for intangible assets: How to manage and measure your company’s brand, patents. Intellectual property and other services of value. Mcgraw-Hills Publishers company, New York.
Berzkalne I, Zelgalve E (2014). Intellectual Capital and Company Value. Proc. – Soc. Behav.
Sci. 110:887-896.
Bharathi KG (2015). Impact of intellectual capital on financial performance and market valuation of firms in India. Int. Lett. Soc. Humanistic Sci. 48:107-122.
Bontis N (1998a). Intellectual capita: An exploratory study that develops measures and models.
Manage. Decision 36(2):63-76.
Bontis N (2000b). Intellectual capital and business performance in Malaysian industries. J. Intellect. Capital. 1(1):85-100.
Bontis, N, Keow, W.C.C & Richardson, S (2000). Intellectual capital and business performance in Malaysian industries, journal of intellectual capital I (1), 85-100.
Bornemann M, Knapp A, Schneider U, Sixl K I (1999). Measuring andreporting intellectual capital: Experience, issues, and prospects. Int.
Breman N, (1999). Reporting and managing Intellectual capital! Evidence from Ireland’ paper presented at the international symposium measuring and reporting intellectual capital experiences, issues and prospects, June, Amsterdam.
Broring S, Cloutier LM (2016). Value-creation in new product development within converging value chains: An analysis in the functional foods and nutraceutical industry. Brit. Food J. 110(1):76-97.
Chan KH (2011). Impact of intellectual capital on organizational performance: An empirical study of companies in the Hang Seng Index. Learn. Org. 16(1):22-39.
Chen MC, Cheng SJ, Hwang Y (2005). An empirical investigation of the relationship between intellectual capital and firms’ market value and financial performance. J. Intellect. Capital. 6(2):159-176.
Chinaemerem OC, Anthony O (2012). Impact of capital structure on the financial performance of Nigerian firms. Arabian J. Bus. Manage. Rev. 1(12):43-61.
Choudhury J (2010). Performance impact of intellectual capital: A study of Indian IT Sector. Int.
J. Bus. Manage. 5(9):72-80.
Clarke M, Seng D, Whiting RH (2011). Intellectual capital and firm performance in Australia. J. Intellect. Capital. 12(4):505-530.
Dadashinasab M, Sofian S (2014). The impact of intellectual capital on firm financial performance by moderating of dynamic capability. Asian Soc. Sci. 10(17):93-100.
Dahiyat, A. (2016). Does Liquidity and Solvency Affect Banks Profitability? Evidence from Listed Banks in Jordan. International Journal of Academic Research in Accounting, Finance, and Management Sciences, Vol. 6, No. 1: 35-40.
Deep R, Narwal KP (2014). Intellectual capital and its association with financial performance: A study of Indian textile sector. Int. J.
Dewa, I. K. A. D. (2015). Effects of Financial Risk and Sales Growth on Profitability and Property Company Values. Journal of the Economic Studies Bulletin, Vol. 20, No. 2: 158-167.
Ekwe, M. C. (2016), the relationship between intellectual capital and Growth in revenue of deposit money banks in Nigeria. Research Journal of financial and Accounting 4 (12) 55-64.
El –Bannany, M (2016). A study of determinants of intellectual capital performance in banks the UK Case. Journal of intellectual capital, 9 (3), 487-498.
Ghozali, I. (2016). Application of Multivariate Analysis with program IBM SPSS 23, The Eighth Edition. Semarang: Publishers of Diponegoro University.
Gunde, Y. M., Murni, S., and Mirah, H. R. (2017). Analysis of the Effect of Leverage on Profitability in Food and Beverages Sub-Industry Manufacturing Companies Listed on the Indonesia Stock Exchange Period 2012-2015. EMBA Journal, Vol. 5, No. 3: 4185-
4194.
Published
2019-07-15
Section
Articles
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