Impact of Intellectual Capital on Financial Performance of Listed Nigerian Oil Marketing Companies

Abstract

Intellectual capital plays an important role in every company regardless of nature and the environment its operates, in the sense that, investment in human capital development is considered to be important than in physical and financial asset despite the fact that such expenditure is not expressed in monetary term but in narrative form especially in Chairman’s statement. Therefore, this study examined the impact of intellectual capital on the financial performance of the listed Nigeria oil marketing companies. The study’s period spanned through 10 years 2007 - 2016. Intellectual capital was measured by the market to book value ratio (MB), Value Added intellectual coefficient (VAIC), and monetary model of Tobin’s Q (MMQR) while the financial performance was measured by return on asset (ROA). The ex-post facto research design was adopted while data was extracted from the firms’ financial statements. Multiple regression analysis was used to ascertain the impact of intellectual capital on financial performance. From the result, it was discovered that market to book value has a negative significant impact on return on asset. Monetary model of Q Tobin’s has an insignificant impact on return on asset while Value added intellectual coefficient also has an insignificant impact on return on asset. The study, therefore, recommended that the listed Nigerian oil marketing companies should strive to boost the value of their intellectual assets for its ultimate effect on ROA through maximization of their market value, maximization of Intellectual Capital return and more investment in Intellectual Capital components, particularly human, structural and relational capital. More attention should be given to the human side of the intellectual capital and reliance should not strictly be focused on the numeric evaluation and improvement. Also, standard on intellectual capital accounting is issued by the International Financial Reporting Committee (IFRC) to enable firm’s measure and record their intellectual capital values as they relate to financial performance in their income statements which will invariably improve company performance.

Keywords: Accounting, Financial performance, Financial reporting, Intellectual capital, Tobin Q