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.