Human Capital Cost and Shareholders’ Equity of Listed Oil and Gas Companies in Nigeria

This study aimed to investigate the effect of human capital cost on shareholders’ equity in Nigerian oil and gas companies from 2012 to 2021. The research employed panel pool and utilized secondary data extracted from annual financial reports of a subset of listed oil and gas companies, as published by the Nigerian Stock Exchange. The dependent variable, shareholders’ value, was measured as returns on equity (ROE), while human capital accounting was measured as human capital disclosure/costs. The results revealed a positive relationship between human capital cost and shareholders’ equity. The p-values of t-statistics for development cost, pension and provident fund contribution, and retirement benefit were all significant at a 5% level, indicating their impact on returns on equity. However, health and safety cost, recruitment and selection cost, settlement allowance, and training cost were found to be statistically insignificant. Positive regression coefficients for development cost, pension and provident fund contribution, and settlement allowance indicated a positive relationship, while negative coefficients for other factors suggested a negative relationship with returns on equity. The coefficient of determination of 74.9% indicated that human capital cost explained a significant portion of returns on equity. Minimal autocorrelation was observed, and the study concluded that human capital disclosure had a long-term effect on returns on equity. Based on the findings, several recommendations were proposed. Management should focus on the significance of key components of personel costs. Additionally, companies should continue investing in and prioritizing human capital development to improve financial performance and returns on equity. Finally, consistent and transparent human capital disclosure practices are recommended to sustain long-term positive effects on financial performance.