Empirical Evaluation of Effects of Intellectual Capital Efficiency on Firm’s Value in Some Selected Listed Firms on Nigerian Exchange Group

Abstract

This contemporary world of economy driven by information and communication technology (ICT) has at its heart the dynamic force of knowledge and human capital development, pivotal to a standard capital market of a world class, has become a very vital and precious asset to organisations. This study examined the effect of Intellectual Capital Efficiency on Firm’s Value in Some Selected Listed Firms on Nigerian Exchange Group. Data for the study were extracted from annual reports and accounts of thirty one selected companies for the period 2016-2021.Datafor Intellectual Capital Efficiency proxy by Modified Value Added Intellectual Coefficient (M-VAIC=HCE,SCE,RCE and CEE) and Firm’s value estimated by Market to Book Value(M/BV), Earnings Per Share (EPS) and Tobin Q (TQ) were extracted from the annual reports and accounts of selected companies. Three research hypotheses were formulated and tested adopting both descriptive statistics and simple regression techniques (OLS) with the aid of Stata 13.0 software. The findings revealed that M-VAIC have positive and significant effect on M/BV,EPS and TQ of Some Selected Listed Firms. Also, the introduced control variable (firm size) has a positive relationship and significant effect M/BV,EPS and TQ of Some Selected Listed Firms in Nigeria. Consequent upon this study, it was recommended that the importance of the intellectual capital should not be undermined and the mechanism, through which intellectual and human capital flow should be developed, maintained and improved; Since ICE has been shown to be the key driver of value creation, deliberate efforts should be made to grow IC of firms by first recruiting very competent staff, train and motivate them. Companies must strategically and deliberately train and retain staff for a long time to avoid losing the intellectual assets possessed by them, which could stimulate better future value and firms should invest in knowledge capital (that is intellectual capital), information technology (ICT) that can help they increase in their structural capital by harnessing information technology.