Expenditure in Human Resource and Financial Performance of Quoted Manufacturing Companies in Nigeria

Abstract

Despite the philosophy in the conventional economics literature about the importance of human resource in the equation of value creation, human resource has been largely relegated to the bottom in the entire valuation of business model elements. Hence, the nexus of expenditure in human resource to financial performance of business entities in Nigeria is still empirically unclear. Thus, the researcher aimed to evaluate the influence of expenditure in human resource (EHR) on financial performance of quoted manufacturing companies in Nigeria. Salaries, wages, allowances (SWA), other staff related expenses (OSRE,) and human resource efficiency (HRE) are adopted as proxies for expenditure in human resource, accounting based profitability represented as return on equity (ROE) and capital market performance denominated into market value performance of firms (MVP) were proxies for financial performance. Causal comparative and descriptive research designs were adopted in the operational method for estimating the test results of the four hypotheses of the study. Result of the multivariate econometric regression demonstrated a mixed findings at varying magnitudes of significance. Besides statistically significant P-values for SWA and OSRE in hypothesis one, SWA demonstrated significant positive unstandardized beta coefficient contribution while HRE in hypothesis four indicated insignificant but positive unstandardized beta coefficient. Hence, the null hypotheses were rejected in the analysis. However, main predictors of focus were not adequately statistically significant in hypothesis two and three, thus, their null hypotheses were not rejected. Borrowing further interpretation of the empirical result from the explanatory credence of extant accounting literature, the researcher concluded that expenditure in human resource (EHR) among quoted manufacturing companies in Nigeria is positively associated with their financial performance. Such companies were therefore recommended ..