FINANCIAL, MANUFACTURED CAPITAL AND FINANCIAL PERFORMANCE: EVIDENCE FROM LISTED MULTINATIONAL COMPANIES IN NIGERIA

Authors: Lambe Isaac, Ph.D., Ame Jacob Ojobo, Ph.D., Dzugwahi Haruna & Tion Williams A.

ABSTRACT

The global reporting landscape is evolving with the recent development of integrated reporting that helps in addressing the concerns of stakeholders regarding accountability, transparency, and full disclosure. An integrated reporting system combines financial and non-financial information and communicates it to stakeholders in a concise manner. Consequently, companies and countries are at various levels of adopting integrated reporting, and a need to examine its effect on firm performance arises. This study, therefore, seeks to evaluate the effect of integrated reporting (IR) (financial and manufactured capital) on the financial performance of listed multinational companies in Nigeria. The study employs a longitudinal research design and secondary data sourced from the financial statements of the companies from 2011 to 2020. Financial performance is the dependent variable proxied by Return on Equity (ROE). IR is the independent variable proxied by Financial Capital and Manufactured Capital. Descriptive, correlational, and panel regression analysis of the fixed effect model was employed for the analysis. STATA 16 is the software used to aid the analysis.  The findings revealed that financial capital positively and significantly affects the financial performance of listed multinational companies in Nigeria. While manufactured capital inversely and insignificantly affected financial performance. The study concludes that the adoption of IR improves firm financial performance. The study recommends that companies should mandatorily adopt and continue with the practice of integrated reporting systems since it improves firm performance. Accounting standard setters and regulatory authorities should provide such policy directions.

Keywords: Financial Capital (FC), Manufactured Capital, Financial Performance, Integrated Reporting (IR)

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