Intangibles, Intellectual Capital, and the Performance of Listed Non-Financial Services Firms in West Africa: A Cross-Country Analysis

Abstract

This study aims to examine the impact of intellectual capital and intangible value on the performance of listed non-financial firms in West Africa. The study used the Value Added Intellectual Coefficient (VAIC™) to measure intellectual capital performance (with components as ICE—Intellectual Capital Efficiency an additive measure of the next two metrics, HCE—Human Capital Efficiency, SCE—Structural Capital Efficiency and CEE—Capital Employed Efficiency), financial ratios to measure intangible value and return on assets to measure performance while controlling for firm-level and macroeconomic variables. Using the panel-corrected standard error regression on 59 firms operating from 2007 to 2018, the study found that VAIC, ICE, HCE and SCE measures of intellectual capital are the pièce de résistance that drive the performance of firms. It is found that the relationship is curvilinear taking the shape of an inverted U. CEE does not drive the performance of firms, and asset tangibility inhibits performance but the investment in intangible fixed assets has a positive insignificant effect on performance. Firm size has a positive impact while financial leverage has a negative impact on performance. Human development does not drive performance but foreign direct investment and economic development do. There are country-specific insights where in Ghana intellectual capital and intangible value have a very strong positive effect on performance, followed by a relatively high impact in Cote D’Ivoire while there is a weak effect in the Nigerian context. The study also explores the effect of other variables such as firm size, financial leverage, human development, foreign direct investment and economic development. The findings are useful for policy, accounting, finance, economic and human resource practitioners as well as, for the academic community.