Human Capital Investment and Performance of Quoted Manufacturing Companies in Nigeria

The study investigates the influence of investment in human capital on the listed manufacturing firms’ financial performance in Nigeria. Adopting an ex-post facto design, the study examined the experience of 38 listed manufacturing firms during the period 2014-2023. The study specifically examined the influence of the efficiency of human capital and employees’ compensation on the return on assets and the operation expenses. The firms’ annual reports provided the source of the data that were analyzed using descriptive correlation analysis and least square regression analysis. The findings of the study identify that HCE has a positive and significant influence on the ROA (β = 1.5329, p < 0.05), indicating that firms with higher human capital efficiency experience good financial performance. The employees’ compensation also has a positive and significant influence on the ROA (β = 1.0265, p < 0.05), indicating that higher compensation yields higher profitability possibly with the aid of higher productivity and employees’ staff retention rates. HCE also has a marginally significant influence on the OPEX (β = 0.0631, p < 0.05), indicating that companies that invest in human capital might record higher operation expenses with the inclusion of training and staff development expenses. The findings emphasize the significance of strategic investment in human capital in influencing the performance of the firm while offsetting the associated expenditure. The study advises that manufacturing companies optimize human capital efficiency with the development of skills and the use of performance-based compensation schemes and adopt the use of optimization of expenditure strategies to enhance profitability.