Nexus of Working Capital Management and Firm Performance in Nigerian Food and Beverages Industries: A Link with Risk-Return Theory

This paper examines the nexus of working capital management and financial performance of selected multinational food and beverages industries in Nigeria for the period between 2006 and 2014 and establishes its linkage with risk-return theory. An explanatory research design is adopted and the secondary data used were gathered from 5 purposively selected quoted food and beverages companies using GLS panel regression analysis. The pooled regression shows that account receivable ratio (ARR) and debt ratio (DER) have negative effect but significant at 1%, working capital (WCA) is also significant at 5% but had positive effect, however, sales growth (SGR) was insignificant. It is also discovered from the Fixed Effect Estimation that working capital management variables such as account receivable ratio (ARR) and debt ratio (DER) have negative effect but significant at 1%, working capital (WCA) is also significant at 5% but has positive effect, while sales growth (SGR) has negative effect but insignificant to the performance of the companies. This signifies reduction in the performances of food and beverages industries which calls for urgent attention since they are posting inverse effect. The unison in both estimations shows that those variables are the major factors influencing the performance of food and beverages industries in Nigeria and thus, it is concluded that the management board of these industries should restructure their working capital management policy as it has the tendency of affecting the dividend policy and firms’ liquidity, which invariably affects the maximization of shareholders’ wealth. This can only be done when managers reduce account receivable days; ensure proper debt management technique, improve sales strategies to enhance sales growth as well as maintain optimal working capital level to reflect the risk-return theory of firms

Firm Structural Attributes and Capital Structure Adjustments among Listed Manufacturing Firms in Nigeria using Static and Dynamic Approaches

The study examined the effect of firm structural attributes on capital structure adjustments of Nigerian listed manufacturing companies. Out of the 56 listed firms 35 listed manufacturing firms were selected using the purposive sampling approach. Dynamic and static estimation techniques were applied. The results from both static and dynamic panel data revealed that assets tangibility had a positive and significant effect on capital structure adjustments with (t= 4.463; t = 2.965; p <0.05). Non-debt tax shields (t= -2.831; t= -4.478; p <0.05) had negative but significant effect on capital structure adjustments. Furthermore, static result showed that firm size (t= -5.617; p <0.05) had negative but significant while dynamic results revealed firm size (t=6.956; P<0.05) had a positive and significant effect on capital structure adjustments. This study concluded that structural attributes serve as firm-level determinants to understanding of factors influencing the capital structure and speed of adjustments of listed companies in Nigeria. It was recommended that management of firms need to expand in size and investing in tangible assets to enhance their profit level, this will enable them to enjoy large profit levels with a large reduction in debt ratio

Nexus of bank personnel and cost-income ratio (CIR) in Nigeria

This study investigates the causal relationship between bank personnel ratio and the cost-income ratio based on performance in Nigeria for the period of 2004–2015. Secondary data collected on a cross section of 15 banks during this period was analyzed using panel unit root, cointegration and Granger causality techniques. A unit root test revealed that the variables are stationary at order one. The result further shows there is an equilibrium relationship or stability in the short and long run; furthermore, there is a bidirectional causal relationship between personnel ratio and cost-income ratio. Therefore, the study recommends that the apex bank should enforce policies in the banking sector that will minimize the unit cost of operation – even though they might hire more staff. This is to enhance the stability of the banks in Nigeria and to avoid any threat to their continuity

Firm-Specific Factors that Affect the Profitability of Nigerian Insurance Sector

This study investigates the firm-specific factors that affect the profitability of the composite insurance company in Nigeria from 2009-2015. The work adopts explanatory research design and also analyzes the secondary data gathered using panel data regression model. The result reveals that while a negative linear relationship exists between the return on asset, leverage, tangibility, and size, there is a positive linear relation between the return on asset, risk and growth of the composite insurance company in Nigeria. The probability values 0.04, 0.00 ˂ 0.05 show that leverage, and tangibility are statistically significant at 5 and 1 percent level; the Hausman test reveals that the random effect model is better than the fixed effect model in determining profitability of the composite insurance company in relation to the firm- specific factors under consideration. The study, therefore, concludes that the leverage of composite insurance company as revealed in this study is high and as a result limits the average returns on asset and that the firm- specific factors are relevant in enhancing the composite insurance company’s profitability and its sustainability in Nigeria.JEL Codes: E020; G2