Training Cost and Financial Performance Nexus: Sector Analysis of Quoted Manufacturing Firms in Nigeria

Oluka Nyime OBULOR, John Ohaka


Accounting functionaries are increasingly recognizing that human capital features productive capabilities, which manifest as skills, experience, and knowledge. These valued competencies make personnel adaptable, productive and competitive amongst contemporaries. This study, therefore, focuses on quoted manufacturing firms in Nigeria to determine the effect of human resource cost on financial performance. Adopting ex-post facto design, with panel data spanning 2008 to 2017, the operationalized variables are training cost, return on equity, and earnings per share. Financial time series of all 20 quoted manufacturing firms in Nigeria were obtained for analysis, as contained in Nigerian Stock Exchange publications. Data analysis details and results are presented in terms of Correlation Coefficient (R), Coefficient of Determination (R2), T-test, F-test, and Granger Causality. Following the outcome (1.660 critical t-value at 0.05 < 3.734 computed t-value), the first null hypothesis is rejected, in favour of the alternate hypothesis, which states that training cost has significant effect on return on equity. Also, regarding the second hypothesis, the adjusted R2 of 0.594 implies that training cost explains 59.4% of the variations in earnings per share. These revelations affirm that human resource cost has significant effect on financial performance of quoted manufacturing firms in Nigeria. It is, therefore, recommended that the firms should recognize human capital investment as prime requisite for corporate performance, and strive to improve their human capital investment to total assets ratio. They also consistently ensure proper classification of cost under their capital and revenue expenditure sub-heads to standardize their financial reporting system.

Keywords: Financial performance, training cost, manufacturing firms.

DOI: 10.7176/RJFA/10-18-10

Publication date:September 30th 2019

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