EFFECT OF HUMAN CAPITAL EXPENDITURE ON THE PROFITABILITY OF SELECTED QUOTED MANUFACTURING COMPANIES IN NIGERIA

Abstract

In the present knowledge based and an increasingly more competitive economy, a company’s human capital is a fundamental determinant of its performance. This accounts for the reason why human capital is getting wider attention with increasing globalization. The study was an analytical research design. The population of the study comprised forty-five in number out which ten companies were purposively selected as sample. The selected quoted companies have their corporate headquarters located in Lagos. This study used data mainly from secondary sources made up of financial statement for each year covered by the study. This is because the estimation of models adopted in the study required such data. The study covered a period of ten years from 2005 to 2014. The analyses of data were done using descriptive statistics such as mean, standard deviation, kurtosis and Skewness as well as inferential statistics such as panel regression and pearson product moment correlation. The result of the correlation matrix for the relationship between the two variables ranges between 24% and 52%. The result of the panel regression used in relating the joint power of the variables showed p-value of 0.0000 which made the model to be fitted at 1%. The study further revealed that classifying expenditure on human capital will avail organizations to check on the significance of individual classification with profitability. Also, classifying the expenditure makes clear the R – Square of each of the companies which ranges between 20% to 95%. On the other hand, its non classification showed the R – Square to be 30%. The study therefore concludes that expenditure on human capital by manufacturing companies in Nigeria relates positively to their profitability with very few ones having weak correlation between the two.