THE INFLUENCE OF INTELLECTUAL CAPITAL ON THE COST OF EQUITY: EVIDENCE FROM NIGERIA'S LISTED MANUFACTURING FIRMS

This study determined the effect of intellectual capital on cost of capital of listed manufacturing firms in Nigeria. To accomplish this objective, this study employed longitudinal research design and a panel data set sourced from annual financial reports of a sample made up of forty-two (42) manufacturing companies listed on the floor of the Nigerian Exchange Group Limited (NGX) over an 11-year period beginning from year 2012 to year 2022. The study modelled cost of equity as the function of human capital efficiency, structural capital efficiency, capital employed efficiency and relational capital efficiency. A multilevel mixed-effects linear regression analysis technique was employed. Broadly, the results reveal mixed evidence suggesting that the effect of intellectual capital management on cost of equity is dependent on the unique characteristics of the proxy employed. The outcome indicates that human capital efficiency has an insignificant effect on cost of equity capital. Structural capital showed an insignificant effect on both cost of equity capital. Capital employed revealed a significant negative effect on cost of equity capital while relational capital has no significant effect on cost of equity capital. Based on these empirical outcomes, the study recommended amongst others, that policy makers such as the Federal Ministry of Industry, Trade, and Investment (FMITI) should promote and support initiatives that encourage manufacturing firms to invest in workforce development, training, and skill enhancement to equip the workforce with skills that align with industry demands.