Human capital disclosure and maximisation of shareholders’ value in selected listed manufacturing companies in Nigeria

Olayiwola, John Ayobamibo (2015)



This study investigated the level of human capital disclosure; and assessed the relationship between human capital reporting and earnings potentials. It also evaluated the relevance of human capital accounting information on the market capitalization of quoted manufacturing companies in Nigeria. These were with the view to providing information on how capitalization of human capital investments gives insight into the financial position of Listed Manufacturing companies in Nigeria. This study employed primary and secondary sources of data collection. A sample of 50 quoted manufacturing companies out of 105 listed manufacturing companies in Nigeria were purposively selected based on availability and disclosure of human capital information in their annual reports over a period of 2007-2013. Year 2007 was chosen as base year because this was the year when the global capital market experienced a financial turmoil whose impact was felt all over the world including Nigeria. Primary data on the extent of Human Capital Disclosure in quoted manufacturing companies in Nigeria were sourced through the administration of questionnaire to three members of staff, one of whom was a management staff and two other senior members of staff in the human resource Department of selected quoted manufacturing companies making a total of 150 respondents. Secondary data on salaries and wages, retirement benefit costs, other employees’ costs and labour turn over were obtained from the audited Annual Reports of the selected companies. Data collected were analyzed using content analysis, bar charts, analysis of variance and econometrics techniques. The results showed that the level of human capital disclosure was below 35% indicating a relatively low level of disclosure in listed manufacturing companies in Nigeria. The results further showed a positive and significant relationship (r=0.54793, t=2.45; p<0.05) between the total value of human capital reported and earnings potentials of companies. Finally, the results showed that the human capital accounting information had a positive and significant relevance (β=0.02, t=2.42; p< 0.05) to market capitalization. This study concluded that capitalization of human capital investments in company’s financial report had the aptitude of increasing the future earnings and the shareholders’ fund of listed manufacturing companies in Nigeria.