INTRODUCTION
Post industrial revolution era brought about the dominance of four factor input in the production process owing to the fact liquid wealth, properties and capital were prominent components. Gradually, human input begun to take the driver’s sit due principally to the advent of knowledge economy. As such, intellectual capital has today become the major and indispensable component of the modern knowledge economy (Pulic, 2004).
In addition to the intellectual capital, other elements namely; information and communication technology and innovation have now a key lead in the ever dynamic knowledge economy which transcends conventional traditional niche and ever dynamic environment. The significance of this emerging capital brought human assets into pivotal component of strategic corporate decisions of organizations.
Intellectual capital despite its significance and prominence in corporate performance surfers a great deal of setback in the empirical realm largely due to the fact that it can’t be objectively measured and compared across firms because of its intangible nature, relative scarcity, and its enveloped into other forms of assets Lev(2011). Intellectual Capital as highlighted earlier surfers a pitfall in terms of measurement inconsistencies methods as often used by corporate managers and other stakeholders to avail them the assessment of the level of intellectual capital of firms. As a result of the absence of standardized procedure in practice and research, it is therefore cumbersome to effectively measure and compare intellectual capital across similar firms for decision making at strategic level of governance.
One method used to overcome this difficulty is the Value Added Intellectual Coefficient (VAIC) model (Pulic 1998; 2000). Other methods used other than the VAIC model include various schools of thoughts in modelling IC as described by chen at el (2009) and Roos et al. (2005) are Direct Intellectual Capital Methods (DICM), Return on Assets Methods (ROAM) and Scorecard Method. The VAIC model applies the efficiency concept by way of measuring the extent of output produced over input entered. Previous studies have used the VAIC model to measure IC and examined the impact of IC on market performance of firms in different countries. However, the results are at best mixed. Recently the VAIC model has been subject to critical review (Iazzolino & Laise 2013; Stahle, Stahle & Aho 2011) both in regard to the conceptual basis for the model and the mixed empirical findings. This study provides further empirical evidence on the model especially as used to mediate between Capital Structure (CS) and Financial Performance (FP). The present study examines the relationship between IC and market performance of multinational firms engaged in R&D. This sample is specially chosen to show the effect of reliance on IC in R&D firms as perceived by investors.
Fundamentally, the purpose of this paper is to present the extended VAIC model by Makki and Lodhi (2008) with some other relevant variables by relating IC with capital structure to creating corporate value represented by financial performance of listed banks in the Nigerian Stock Market 2010 to 2015. The other main objective of this study is to fill the gap in the field of intellectual capital by using IC as the mediator, use of structural equation model for impact measurement and other methodological alterations.