Evaluating the Effect of Intangible Assets on Economic Value Added of Selected Manufacturing Firms in Nigeria

This study tries to ascertain the impact of total intangible assets on the financial performance of manufacturing firms publicly listed on the Nigerian Stock Exchange (NSE). Intangible assets are not accorded the same relevance as tangible assets. Studies has proven that total intangible assets including human capital is the reason behind the survival of ‘firm A’ in this era of persistent economic recession and liquidity squeeze in lieu of ‘firm B’ that submerged albeit in the same industry and sub-sector. In Nigeria, the value of total intangible assets (less than 1%) for all the manufacturing firms studied results from the volatility of this asset. The study made use of secondary data collected and collated from 46 manufacturing firms audited annual reports. Both descriptive and inferential statistics were employed in data analysis. In particular, Prais Winsten Regression Correlated Panels Corrected Standard Errors (PCSEs) is used to test the relationship between the variables given that panel (cross-sectional and time series) data are used for the study. Findings indicate the existence of a strong negative relationship between EVA and IA as P = 0.011 < 0.05 significant level. The systematic variation is explained by 55.13% coefficient of determination (R 2 ) which is above average and significant for panel data. In addition, there is a significant negative relation between EVA and LnTA at P = 0.026. Conversely, there is perfect positive relationship between EVA and ROA at P = 0.000. These results explain the behavior of firms in minimizing the value of intangible assets given that the relationship between intangible assets and financial performance proxied by EVA is very significant and negative. Key words: Economic Value Added, Intangible assets, Firm Value, Manufacturing Firms