THE IMPACT OF HUMAN RESOURCE ACCOUNTING ON THE FINANCIAL PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA

Abstract

Using human resource accounting to determine the price and worth of employees as an intangible asset for the business's financial records is a serious contest amongst scholars as to the method to adopt. However, it is acknowledged as a crucial asset and value creator. It is therefore unequivocal to say that the ability of a manager in the management of other resources is critical to the success of the company. In Nigeria, there is growing interest in the field of human resource accounting and reporting. The study reveals that while other researchers have looked at Human Resource Accounting (HRA) in various industries with a focus on various businesses, much have not been done to evaluate the impact HRA has in the banking industry. Thus, this study examined the impact of human resource accounting on the financial performance of deposit money banks in Nigeria. It specifically examined the impact of Human Resource Accounting (Gross Labour Cost) on the Return on Equity (ROE) of Nigerian Deposit Money Banks; and determined the impact of Human Resource Accounting (gross Labour cost) on the Profit after Tax (PAT) of Deposit Money Banks in Nigeria. The secondary data used in this study came from the ten (10) quoted banks listed on the Nigerian Stock Exchange. Their annual reports and financial summary were used from 2011 to 2020. Using the Statistical Package for Social Science (SPSS) version 23, the data retrieved from the financial report of the examined banks were analyzed using descriptive statistical pearson correlation and ordinary least square technique (OLS) regression. The linear regression models used in the study align with the previously developed research hypotheses. The study found that Human Resource Accounting (Gross Labour Cost) has a positive contribution of 0.001 impacts on Return on Equity (ROE). However, the effect of GLC is statistically insignificant with a P-value of 0.222˃0.05. So also, the results further revealed that human resource accounting has a positive effect on the profit after tax (PAT) and it is statistically significant with the P -value of 0.039 ˂0.005level of significance. Consequently, the study validated the existence of a significant positive impact of Human resource accounting on bank’s profitability. Based on the study's findings, it was concluded that, using the decision-making theory as a guide, organizational financial performance is influenced by the performance of the people who make up the organization. The study recommended among others that Businesses ought to put more money into the education and training of their staff members and guarantee low labor turnover and strong employee retention.