Empirical Analysis of the Effect of Intellectual Capital Efficiency on Cost of Debt

Abstract

The main objective of this study was to examine the effect of intellectual capital efficiency on cost of debt of manufacturing companies listed on the floor of the Nigerian Exchange Group from the 2014-2023. The research design adopted for this study was ex post facto, secondary data were used and the population of the study consisted of 62 listed manufacturing companies in Nigeria. The sample size of this study was 27 purposively selected listed manufacturing companies in Nigeria. The data used in this study were analyzed using the Generalized Method of Moment (GMM) regression analysis. The findings of this study revealed that human capital efficiency (HCE), has significant negative effect on cost of debt; relational capital efficiency (RCE) has significant negative effect on cost of debt; and structural capital efficiency (SCE) has significant negative effect on cost of debt of listed manufacturing companies in Nigeria. Based on the above findings, it was concluded that intellectual capital efficiency can significantly impact on the cost of debt of listed manufacturing companies in Nigeria. It was therefore recommended among others that the management of manufacturing firms should develop and maintain strong relationships with creditors and financial institutions to negotiate better credit terms and reduce the cost of debt. It was also recommended that the management of these firms should continue to improve and leverage structural capital to enhance operational efficiencies and lower the cost of debt.