Intellectual Capital, Information Asymmetry and Cost of Equity Capital of Listed Consumer Goods in Nigerian Exchange Group

Abstract

The objective of this study is to investigate statistically the influence of intellectual capital disclosure (IC) on cost of Equity capital. The study focused on listed consumer goods companies in Nigerian Exchange Group. The ex-post facto research approach was employed, using panel data sourced from published yearly financial reports of selected firms. The study covered 10 years from 2011 to 2020. Descriptive and inferential statistical tools were used in analyzing the data. The findings confirmed our hypotheses that specify the presence of a substantial and negative relationship between intellectual capital reporting with its four mechanisms (Physical capital, human capital, structural   capital and Relational) and the cost of equity). The study found that intellectual capital reporting had significant effect on cost of equity capital of listed consumer goods in Nigerian Exchange Group (AdjR² = 0.3733; F-Stat. = 1.122; p = 0.034). Nonetheless, the results also showed that the controlling effects of information Asymmetry has a positive and insignificant influence on the Cost of common stock capital of consumer goods firm in Nigeria. The outcomes of this study are of great significance to rule formulators and organizations. Precisely, the knowledge of the influence of Intellectual capital reporting on cost of common stock of capital benefits policy formulators in the assessment of the costs and gains of disclosure. Furthermore, in relation to executives of companies, the findings revealed the advantage of improved IC reporting concerning the lessening in their cost of capital. This paper provides pragmatic confirmation of the relationship between Cost of equity capital and the extent of reporting in the four separate intellectual capital classifications (Physical, human; relational and structural capital).

Keywords: intellectual capital; Human Capital VAIC model; Consumer Goods, Cost of Equity Capital

DOI: 10.7176/PPAR/13-2-05

Publication date:March 31^st 2023