The Effects of Boards Composition, Rewards and Ownerships on Intellectual Capital Efficiency of Banks in Nigeria

Abstract

This paper examines the impact of corporate governance mechanisms on intellectual capital 
efficiency (ICE) of Nigerian Banks. The data for the study were generated from the audited 
financial statements of the sample banks for the period of 11 year (2003 - 2013). The study 
adopted Value Added Intellectual Co-Efficient (VAIC) methodology which includes three ICE 
components: human capital efficiency, structural capital efficiency and capital employed effi
ciency. Corporate governance mechanisms considered in this study are Boards Composition, 
Managerial Rewards, and Ownership Structure. The study controls for the return on equity and 
leverage of banks. The regression results show that the corporate governance attributes consid
ered in this study are good indicators of (ICE) because their impact are positively and signifi
cantly at less than 1% with R-square of 58% and adj R-square of 55%. Also the two control 
variables are significantly related with intellectual capital efficiency. This implies that corpo
rate governance have significant impact on ICE of firms in the Nigerian banking industry. 
Therefore, the study recommends that board should acquire political skills which are necessary 
to effective governance. In order to improve ICE, board should make it as their responsibility to 
develop and sustain healthy relationships and maintain open, two-way communication with all 
constituencies of staff in order to incite their IC towards organization’s success.