Journal of Business and Management

Journal of Business and Management

ISSN: 2291-1995 (Print)    ISSN: 2291-2002 (Online)

Volume 3 (2014), No. 2, Pages 30-43

DOI: 10.12735/jbm.v3i2p30

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Impact of Aggregated Cost of Human Resources on Profitability: An Empirical Study

Ifurueze Meshack S.1  Odesa Jeff O1  Ifurueze P. C.2 

1Department of Accountancy, Anambra State University, Nigeria
2Department of Banking and Finance, Tarnsian University, Umuinya, Anambra State, Nigeria

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In Nigeria, the past decades have witnessed a transition from manufacturing to service based economics. The fundamental difference between the two sectors lies in the very nature of their assets. The former sectors are driven by physical asset like plant, and machinery while the later sector is driven by knowledge, skill and attitude of the employee. This had lead to a paradigm shift in expenditure on those assets and interest. As expenditure on human resource increases also lead to the demand for its inclusion in financial report. Expenditure on human resource has two components, the expense and the investment. Conventional accounting treat both as revenue expenditure, this aggregated approach has a negative effect on the profitability. This study examined the relationship between (1) The aggregated cost of human resource and organizational profitability. (2) The effect of the disaggregated cost of human resources on organization profitability. Data was extracted from internal source using a structured information card and annual financial report. Regression analysis was used. The findings show that there is a positive relationship between profitability and human resource cost. It also shows that changes in profitability can be explained when the expenditure on human resource are segregated into revenue expenditure and capital expenditure. The study recommends amongst other, that BETA NIG PLC should imbibe the culture of capitalizing and reporting all investment on human resource that improve the quality and productivity.

JEL Classifications: M32

Keywords: aggregated human resource cost, human capital investment, disaggregated human resource cost

To Cite this Article: Ifurueze, M. S., Odesa, J. O., & Ifurueze, P. C. (2014). Impact of aggregated cost of human resources on profitability: An empirical study. Journal of Business and Management, 3(2), 30-43.

Copyright © Ifurueze Meshack S. et al.

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This article is published under license to Science and Education Centre of North America. This is an Open Access article distributed under the terms of the Creative Commons Attribution 4.0 International License.

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Impact of Aggregated Cost of Human Resources on Profitability: An Empirical Study