Does Liquidity Management Affect Profitability in Selected Nigerian-Quoted Manufacturing Firms?

This study examined the nexus between liquidity management and profitability in selected Nigerian-quoted manufacturing firms. Many business failures have been recorded over the years due to inability to balance the link between liquidity and profitability. Descriptive research design was employed to analyze the data gathered from 2004 to 2014. The study found a positive relationship between credit policy, return on equity and return on capital employed. It equally found that operating cash flow and cash conversion cycle are negatively related to all the metrics of profitability. The study therefore recommends among others, that managers should strive to achieve a reasonable level of profit to optimize shareholders’ wealth and keep the firms in business. Also, managers should effectively manage account receivables and inventory at optimal level to avoid tie down liquid assets unnecessarily. Investors should pay close attention to firms’ operational cash flow in order to access their true state before committing their funds

The Relationship amongst Customer Satisfaction, Loyalty, Demographic and Tripographic1 Attributes: A Case of Star Rated Hotel Guests in Ethiopia

The hospitality industry in general and hotels in particular attend to diverse guests and their expectations. The satisfaction of all hotels guests and retaining them as a loyal customer, given their different profiles, is imperative but challenging to the sector. This study aims to address this very issue by trying to establish the relationship amongst, customer satisfaction, loyalty, demographic and tripographic attributes by focusing on the hotel guests who stayed in star rated hotels in Ethiopia. Satisfaction was measured as satisfaction with the product, satisfaction with the employees and overall satisfaction. Likewise, customer loyalty was measured with the likelihood of customers to return to the same hotel in the future. “A total of 1200 questionnaires distributed to 40 hotels out of which 415 hotel guests responded, by completing the questionnairesâ€. “The result of inferential statistical techniques reveals that there were significant positive relationships between the customer satisfaction variables†(products .488; p<0.001; staff .460; p<0.001), and the customer’s willingness to stay in the same hotel again.†Though all variables of “customer satisfaction affected customer loyalty, the overall satisfaction variable had the highest standardized coefficient (0.328) with a statistical significance (p < 0.01), followed by satisfaction with the product (.227, p<.01), and satisfaction with employees (.190, p<.01). There was also no statistically significant difference (p>.05) in the mean scores of the customer satisfaction and loyalty across the gender, age, marital status and employment type groups of respondents. With regards to the tripographic variables, there was a statistically significant difference (P<.05) in the mean scores of both the customer satisfaction and loyalty across the staying preference of rated hotel types of customers. Additionally, there was a statistically significant difference (p>.05) in the mean scores of customer loyalty across a source of information on the hotel group of respondents. Hotel managers in Ethiopia need to look at the importance of segmentation of guest based on their demographics and tripographic factors so that they provide personalized service to enhance their customers’ satisfaction that could lead to their loyalty

Finance Function Performance Measurement-A Data Envelopment Analysis Approach

 The practice of measuring performance of the finance function as a business support unit is not widespread. This study assessed the importance of measuring finance function performance, by ascertaining whether such measurement facilitates identification of the relative efficiency of business finance functions, and by establishing its impact, if any, on overall company performance. Focussing on a sample of companies in the South African Freight Forwarding industry, a performance metric was developed and implemented to measure finance function performance. Relative finance function efficiency was then evaluated using inputorientated data envelopment analysis (DEA) to identify ‘best in class’ performance and to benchmark participants’ performance. Further, value chain DEA (VC-DEA) was applied to evaluate finance function efficiency simultaneously with overall company efficiency. Results show that implementation of the performance metric together with DEA facilitated the benchmarking of the finance functions of the sample group and the establishment of improvement targets for the finance functions determined as inefficient. In addition, a link between overall company performance and finance function performance in terms of inputs was confirmed; however, this link was not conclusively established as regards finance function performance in terms of outputs. The contribution of the study includes confirmation that implementation of the performance metric together with DEA facilitates the critical evaluation of finance function performance, thus establishing the importance of measuring the performance of the finance functions. In addition, incorporating the use of DEA in a performance framework for the finance function as a business support unit has extended the range of applications of DEA. &nbsp

Capital Structure and Firm Performance in Nigerian-Listed Companies

a number of business failures have not been reported in Nigeria arising from inability to payback nor does service debts .This paper empirically investigate the relationship between capital structure and firm performance in the Nigerian listed firms. A sample of 30listed firms out of a population of 173 were examined from 2005 to 2014 using multiple regression tools. Two hypotheses were formulated and tested using descriptive statistics and an econometric panel data technique to analyze the gathered data. An insignificantly negative correlation was found between financial leverage and ROA on one hand and a significantly negative relationship between debt/equity mix and ROE on the other hand. It is therefore recommended that firms should use long term liabilities to finance firm’s activities and mix debt/equity appropriately by ensuring that debt financing ratio is lower to enhance corporate performance and survival

Modelling Volatility Persistence and Asymmetry with Structural Break: Evidence from the Nigerian Stock Market

Abstract: This study contributes to existing literature on the Nigerian stock market by modelling the persistence and asymmetry of stock market volatility taking into account structural break. It utilises returns generated from data on monthly all-share index from January 1985 to December 2014. After identifying structural break in the return series, the study splits the sample period into pre-break period (January 1985 – November 2008) and post-break period (January 2009 – December 2014). Using the symmetric GARCH model, the study shows that the sum of ARCH and GARCH coefficients is higher in the pre-break period compared to the post-break period, thus indicating that persistence of shock to volatility is higher before structural break in the market. The asymmetric GARCH model provides no evidence of asymmetry as well as leverage effect with or without accounting for structural break in the Nigerian stock market. This study concludes that the Nigerian stock market is characterised by inefficiency, high degree of uncertainty and non-asymmetric volatility.Keywords: Persistence, asymmetry, stock market volatility, structural brea

Efficiency of Foreign Exchange Markets in Sub-Saharan Africa in the Presence of Structural Break: A Linear and Non-Linear Testing Approach

This study examines the efficiency of foreign exchange (forex) market of 10 selected countries in sub-Saharan Africa in the presence of structural break. It uses data on the average official exchange rate of currencies of the selected countries to the US dollar from November 1995 to October 2015. This study employs Perron unit root test with structural break to endogenously determine the break period in the forex markets. It also employs the Kim wild bootstrap variance ratio test and BDS independence test to detect linear and nonlinear dependence in forex market returns respectively. In the full sample period, the Kim wild bootstrap joint variance ratio test shows that only two forex markets are efficient while the BDS independence test reports that all the forex markets are not efficient. The subsample period analysis indicates that the efficiency of the majority of the forex markets is sensitive to structural break, thus providing evidence in support of the adaptive market hypothesis. This study suggests that ignoring structural break and nonlinearity of returns may lead to misleading results when testing for market efficiency

Comparative Analysis of Monetary Policy Shocks and Exchange Rate Fluctuations in Nigeria and South Africa

The study examined a comparative analysis of monetary policy shocks and exchange rate fluctuations based on evidence from the two largest economies in Africa (Nigeria and South Africa) – from 1985 to 2015. Data were derived from various sources which include the National Bureau of Statistics, the Central Banks reports and the World Bank database. Vector Autoregressive (VAR) Analysis was used as the estimation technique. The results indicated that the foreign interest rate in South Africa had higher variations in the short-run. While in the long-run, foreign interest rate has higher percentage variations to exchange rate. In Nigeria the world oil price has the higher influence on exchange rate both in the short-run and longrun periods. Based on these results, the study then recommended that the monetary authorities and policymakers in both countries encourage external currency inflows into the economy. &nbsp

Effect of Agency Costs on Executive Compensation in South African Commercial Banks

This study examines the roles of agency cost (monitoring and bonding cost) on compensation of managers with a view from the managerial-power approach to agency cost. We modelled managers’ compensation and agency cost of banks to emphasise the potential influence of agency cost on managers’ compensation. A Panel Generalised Least Square model was estimated on four largely-controlled commercial banks in South Africa over the period 2010-2015. The result shows that shareholders’ fund, management share option, monitoring and bonding cost were strongly significant in explaining the managers’ compensation in the banks. Therefore, in the South African banking sector, compensation of managers should be based on their managerial power and not only on the principle of optimal-contracting. It is recommended, among others, that monitoring and bonding costs in the South African banks should be re-emphasised and strictly committed to. This should be so because there are direct effects of these costs on managers’ compensation which might be the reason for the persistent agency problem in the banks