Intellectual capital efficiency and corporate book value: evidence from Nigerian economy

Mutalib Anifowose (Department of Accounting, Nasarawa State University, Keffi, Nigeria)
Hafiz Majdi Abdul Rashid (Department of Accounting, International Islamic University Malaysia, Kuala Lumpur, Malaysia)
Hairul Azlan Annuar (Department of Accounting, International Islamic University Malaysia, Kuala Lumpur, Malaysia)
Hassan Ibrahim (Department of Accounting, Nasarawa State University, Keffi, Nigeria)

Journal of Intellectual Capital

ISSN: 1469-1930

Publication date: 14 May 2018

Abstract

Purpose

The purpose of this paper is to examine the value relevance of intellectual capital (IC) by analysing the relationship between IC efficiency (ICE) and corporate book value of listed firms on main board of Nigeria Stock Exchange.

Design/methodology/approach

This study applies the resource-based theory in formulating two hypotheses that guide the results analysis. By employing a two-step dynamic system generalised method of moments (GMMs), and controlling for the possible endogeneity effect on the parameters estimated, for a sample of 91 listed firms on main board of Nigeria Stock Exchange, this study investigates the association of ICE and corporate book value, namely, cash flow from operation and economic value added (EVA), using data over the 2010 to 2014 financial years.

Findings

The results show a significant positive relationship between overall ICE and corporate book value (cash flow from operation and EVA). This study contributes to recent evidence concerning the value relevance of IC information to investors and other interested stakeholders.

Research limitations/implications

The generalisation of the results to smaller firms, in the alternative securities market, may be inappropriate as study sampled listed firms on the main board of Nigerian Stock Exchange.

Practical implications

Those charged with governance should be concerned with the investment and management of IC as it enhances the economic value and operating cash flow in line with the resource-based theory.

Originality/value

This study is first to consider the ICE study across all sectors in the Nigerian economy using modified Pulic value added intellectual capital. The study controls for heteroscedasticity and endogeneity issues by adoption of two-step dynamic system GMMs.

Keywords

Citation

Anifowose, M., Abdul Rashid, H., Annuar, H. and Ibrahim, H. (2018), "Intellectual capital efficiency and corporate book value: evidence from Nigerian economy", Journal of Intellectual Capital, Vol. 19 No. 3, pp. 644-668. https://doi.org/10.1108/JIC-09-2016-0091

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Publisher

:

Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited

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