HUMAN CAPITAL COSTS AND FINANCIAL PERFORMANCE OF LISTED HEALTHCARE FIRMS IN NIGERIA

Abstract

Users of accounting report require financial information to take decisions. In the past, financial accounting has been criticized for lacking rules based on a clear theoretical framework. In addition, the accounting rules developed have been criticized for being too loose, lacking consistency and failing to portray economic reality. Failure of professional accountants and academics to recognize Human Capital Costs (HCC) in the financial statement as an important factor in the determination of performances of firms is one of the drawbacks mentioned in the literature. To that end, this study investigated the effect of human capital costs on financial performance of listed healthcare firms in Nigeria. The specific objectives were to determine the effect of training and development costs, employee costs and health and safety costs on return on assets of listed healthcare firms in Nigeria. The Researchers used ex-post facto research design. Targeted population of this study comprised of all the seven listed healthcare firms in Nigeria which were sampled to five (5) using purposive (Judgmental) sampling technique.  Secondary data were used and it was sourced from annual reports and statement of accounts of the selected firms between 2012 and 2021. Descriptive Statistics, Unit Root Test and Ordinary Least Square Regression were employed with the aid of Microsoft Excel, SPSS 25 and E-View 12. The result of the study showed that training and development cost has negative and significant effect on return on assets. Furthermore, the result indicated that employee costs has positive and significant effect on return on assets. It was also revealed that health and safety costs has negative and insignificant effect on return on assets of listed healthcare firms in Nigeria. The study generally concluded that, there is a negative and significant effect of human capital costs on financial performance of listed healthcare firms in Nigeria under the period of the study between 2012 and 2021. It was recommended amongst others that companies should adopt other human capital costs related expenses as strategy for attracting and retaining high earnings because this study indicated that training and development and employees costs has significant effect on financial performance in term of return on assets.