Influence of Human Capital Expenditure on Tobin's Q of Listed Industrial Goods Companies in Nigeria

This study examined the influence of human capital expenditure (HCE) on Tobin's Q, the market-based measure of financial performance, among listed industrial goods companies in Nigeria. The study adopted an ex post facto research design and drew secondary panel data from the audited annual reports and accounts of thirteen (13) industrial goods companies listed on the Nigerian Exchange Group (NGX) over the fifteen-year period 2010 to 2024, yielding 185 firm-year observations. Data were analysed using descriptive statistics, Pearson correlation, a battery of diagnostic (pre-estimation) tests, and a Fixed Effects Panel Least Squares regression corrected with Panel-Corrected Standard Errors (PCSE) and cross-section weights, the Hausman test having favoured the fixed effects specification over the random effects alternative. The results show that human capital expenditure, jointly with firm-specific effects, exerts a statistically significant overall influence on Tobin's Q (Adjusted R² = 0.9839; F = 536.731, p = 0.000), such that the null hypothesis that human capital expenditure has no significant effect on Tobin's Q is rejected at the aggregate model level. However, at the level of individual coefficients, neither training and development cost (ETDC) nor wages and salaries cost (EWSC) exerted a statistically significant direct effect on Tobin's Q once firm-specific fixed effects were controlled for, indicating that firm-specific, time-invariant characteristics, rather than any single human capital expenditure component, are the dominant drivers of cross-firm differences in market valuation. The study concludes that human capital expenditure matters for market valuation principally as part of a firm-specific bundle of resources and governance systems rather than as an independently potent expenditure line, and recommends that boards and management of listed industrial goods companies integrate human capital investment decisions with broader firm-level value-creation systems, while regulators encourage clearer disaggregated disclosure of staff-related costs to support future firm-level analysis.

Human capital expenditure, Tobin's Q, training and development cost, wages and salaries cost

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