Intellectual capital efficiency and market-based financial performance: Evidence from listed conglomerate companies

Abstract

Having observed the rate at which dissimilarity occurs between market and book value, and management ignorance concerning the impact intellectual capital disclosure has on companies’ values spurred the interest to probe the association between the efficiency of value-added intellectual coefficient (VAIC) and market-based financial performance of listed Nigerian conglomerate companies. To accomplish the purpose of this study, secondary data were employed and extracted from annual audited reports of listed conglomerate companies in Nigeria from the period of 2010–2018. The data obtained were subjected to static panel data regression analysis technique. The random-effects model was adopted because the empirical result from Breusch and Pagan Lagrangian multiplier (BP-LM) and Hausman tests chose it over the fixed-effects model to produce better results. This study revealed that the value-added efficiency of capital employed (VACA), value-added efficiency of human capital (VAHU), and value-added efficiency of structural capital (STVA) are the drivers of intellectual capital in the conglomerate sector. This study concluded that elements of intellectual capital have a strong power on market-based financial performance. This study recommends that information on intellectual capital components should be reported in ways they deem fit by developing a model of intellectual capital disclosure that complies with the International Accounting Standard Board (IASB).

Keywords: Intellectual Capital, Intellectual Capital Efficiency, Market-Based Financial Performance, Conglomerate Companies, Value-Added Intellectual Coefficient, Nigeria

Authors’ individual contribution: Conceptualization — E.A.S.; Methodology — E.A.S. and W.A.M.; Investigation — A.S.K.; Resources — E.A.S.; Writing — E.A.S. and W.A.M.; Supervision — A.S.K.; Funding Acquisition — E.A.S.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: M12, M41, M52

Received: 04.02.2021
Accepted: 20.12.2021
Published online: 22.12.2021

How to cite this paper: Sulaiman, E. A., Kasum, A. S., & Musa, W. A. (2021). Intellectual capital efficiency and market-based financial performance: Evidence from listed conglomerate companies. Corporate & Business Strategy Review, 2(2), 31–42. https://doi.org/10.22495/cbsrv2i2art4