The relationship between intellectual capital performance with companies' performance and intellectual capital disclosure of Nigerian companies

This study aims to investigate the relationship between intellectual capital (IC) efficiency and companies’ performance and its disclosure through a sample of 117 companies in Nigeria over a period of six years. Many intellectual capital studies in developed countries have established links between intellectual capital efficiency and its disclosure of company performance particularly through educational qualification, training and salaries for human capital. Research and development (R&D), advertising, brand and information technology for structural capital were used to investigate the value added efficiency of IC. However, in developing countries like Nigeria, very little attention has been given to IC efficiency and its disclosure in relation to company performance. Therefore, in order to expand the existing intellectual capital efficiency studies this study includes welfare package, compensation cost and intellectual property (patent) to examine IC. Secondary data (annual reports) was sourced from fourteen sectors and tested through multiple regression analysis. The findings of the study provide empirical evidence that intellectual efficiencies are significant and positively related to company performance. The study further reveals that there is a significant difference in the intellectual capital disclosure practice of the sampled companies. Thus, it is recommended that policies that will improve employees’ capability and organizational structure should be given priority. This study contributes immensely to the field of intellectual capital. Firstly, it introduces Nigerian companies’ intellectual capital efficiency and its disclosure features. Secondly, the study expands the Public (2004, 2000) VAIC method by including welfare package, compensation cost and intellectual property as drivers of values. Lastly and most importantly, to the best knowledge of this researcher, this is the first study which simultaneously considers the intellectual capital efficiency and its disclosure in fourteen sectors of the Nigeria economy.