Human Resource Accounting and Shareholders Wealth Maximization: Empirical Study of Nigeria Quoted Manufacturing Firms

  • Davies, Stanley Diepiriye Department of Accountancy, Ken Saro-Wiwa Polytechnic, Bori, Rivers State, Nigeria
Keywords: Human Resource Accounting, Shareholders Wealth Maximization, Quoted Manufacturing Firms.


This study empirically investigated the relationship between human resource accounting and shareholders wealth maximization of selected quoted manufacturing firms in Nigeria from 2000-2016.  Time series data was generated from the Annual Reports of the quoted firms. Twenty manufacturing firms were selected from the population of quoted manufacturing firms.  Two multiple regression models were specified and estimated with the aid of Software package for social services (SPSS). Return on investment was modeled as the function of capital and revenue expenditure components of human resource accounting. The generated collinearity diagnostics result shows that the Eigen values that correspond to the highest condition index and variable constant are consistent with the rule of thumb. The Durbin Watson test shows absence of auto-correlation. From the expenditure component, we found correlation coefficient of 71.3%, R2 and the Adjusted R2 shows that 50.8% and 36.0%. The explanatory power of the predictor variables shows that all the independent variables have positive but insignificant relationship with return on investment of the manufacturing firms except cost of human resource acquisition. The revenue expenditure proved   R2 and the adjusted R2 of 61.0% and 49.3% explained variation on return on investment. The coefficient of the independent variables proved that salaries, wages and bonus have positive relationship with return on investment of the selected manufacturing firms while commission and allowances have positive effect on return on investment. It concludes that human resource accounting has significant relationship with shareholders wealth maximization of the selected manufacturing firms. We recommend that all human capital expenditure should properly be accounted for and the need to investment on human capital of the firms.


Download data is not yet available.


Adam Smith (1776) in Lars, N. and Truls, E. Intellectual capital: a human capital Perspective.( retrieved on 20th September, 2017)
Ahangar, R.G. (2011). The relationship between intellectual capital and financial performance: An empirical investigation in an Iranian Company. African Journal of Business Management, 5(1), 88-95.
Akindehinde, A.O., Enyi, E. P., &Olutokunbo, A. O., (2015). Human Asset Accounting and corporate performance. Amencies International Journal of Contemporary Research 5 (1), 46-52.
Armstrong, M (2014) A charitable approach to personnel, Personnel Management, 28–32
Bassey, E.B., &Tapang A.T. (2012). Capitalized human resource cost and its influence on corporate productivity: A study of selected companies in Nigeria. International Journal of Financial Research 3(2) 48 – 59.
Becker, G. (1962). Investments in human capital: a theoretical analysis.Journal of Political Economy, 70, 9-44.
Canibano, L., García-Ayuso, M., Sánchez, M. P., & Olea, M. (1999). Measuring Intangible to understand and improve Innovation Management—Preliminary results. Paper presented at the OECD International Symposium. (Retrieved on 17th September, 2017).
Edom, G.O, Inah, E. U., &Adanma E., (2015). The impact of human Resource accounting in the profitability of a firm; Empirical Evidence from Access Bank of Nigeria Plc. European Journal of Accounting, auditory and finance research 3 (7), 72-90.
Flamholtz, E.G. (1971). A Model for Human Resource Valuation: a Stochastic Process with Service Rewards. The Accounting Review, 253-267.
Francesca di Donato, DelioPanaro& Sara Trucco(2016)Board Gender Diversity, Network
Gary, S. B. (1962) .Investment in Human Capital: A Theoretical Analysis.Journal of Political Economy, 70 (5), 23-47.
Gavrea, I., and Stegerean, W. (2011). Determinants of organizational performance: The case study of Romania. Management and Marketing Challenges for the Knowledge Society, 6 (2)285-300
Ifurueze M S. Odesa J O & Ifurueze P. C (2014). Impact of Aggregated Cost of Human Resources on Profitability: An Empirical Study. Journal of Business & Management 3(2), 30-43
Ikpefan, O.A., Kazeem, B.L.O., &Taiwo J.U (2015). Human Capital accounting and performance of microfinance Bank (MFB) in Nigeria. Research Journal of finance and Accounting 6 (1) 67-75
Kaplan, R. S. and Norton D. P. (1992).The Balanced Scorecard –Measures that Drive Performance. Harvard Business Review, 70(12)256-278.
Kirfi, M. M &Adbullahi, A, (2012). Human capital accounting: Assessing possibilities for domestication of practice in Nigeria. Research Journal of Finance and Accounting, 3(10), 57-63.
Lall, S.(1999). Competing with Labour: Skills and Competitiveness in Developing Countries, Developing Policies Department. International Labour Office, Discussion Paper 31
Lucky, A. L., (2017). Prudential determinants of commercial bank soundness in Nigeria. Master thesis submitted to postgraduate school, Rivers State University.
Micah, L.C., Ofurum, C.O., &Ihendinihu, J.U. (2015). Firms financial performance and human resources accounting disclosure in Nigeria. International Journal of Business and Management, .7(14), 67-75.
Mirvis, P. H., & Macy, B. A. (1976). Accounting for the costs and Benefits of Human Resource Development Programmes: An interdisciplinary Approach. Journal of Accounting, Organization and society, 1(2.3), 179-193.
Mohammed, N and Ismail, M. (2009).Intellectual Capital Efficiency and Firm’s Performance: Study of Malaysian Financial Services. International Journal of Economics and Finance, (4),78-98.
Ngerebo-a, T.A., and Lucky, A. L., (2016). Interest Rates and Deposit Money Bank’s Profitability: Evidence from Nigeria (1980 – 2014). International Journal of Empirical Finance, 5 (1), 22 – 35.
Obara, L. C. (2013). Conventional human asset accounting treatment and corporate profitability evaluation. European Journal of Accounting Auditing and Finance Research,1(3), 66-82,
Okpala, P.O &Chidi O.C (2010). Human capital accounting and its relevance to stock investment decisions in Nigeria. European Journal of Economics, Finance and Administrative Sciences, 4(21), 13-18.
Parameswaran, R., &Jothi, K. (2011). Human resources accounting: The Chartered Accountant, 867-874.
Patra R., Khatik, S.K., &Kolhe, M. (2003). Human resource accounting policies and practices: A case study of Bharat Heavy Electricals Limited, Phopal, India.International Journal of Human Resources Development and Management, 3 (4),285-301.
Rehman, W.U., Rehman, C.A., Rehuman, H.U., &Zaliad, A. (2011). Intellectual capital performance and its, implication on Corporate Performance: An emperical evidence from modaraba sector of pakistan. Australian Journal of Business and Management Research, 1 (5), 8-16.
Schultz, T. (1961).Investment in human capital. American Economic Review, 51 (1), 1-17.
Seth, N. (2009). Human resource accounting practices and Indian industries. (Retrieved on 17th march ,2017).
Sharma, A. (2012). Impact of human resource accounting on organisational performance. IOSR Journal of Business and Management (IOSR-JBM), 5(1), 25-31.
Woodruff Jr., R. L., (1970). Human resource accounting. Canadian Chartered Accountant, 98, 2-7.
How to Cite
Stanley Diepiriye, D. (2018). Human Resource Accounting and Shareholders Wealth Maximization: Empirical Study of Nigeria Quoted Manufacturing Firms. International Journal of Business and Management Future, 2(1), 38-47. Retrieved from