The International Institute for Science, Technology and Education (IISTE)
Abstract
The study examines the relationship among the size, growth and profitability of quoted manufacturing companies in Nigeria, using data from the Fact Books of Nigerian Stock Exchange between 2007 and 2011. For adequate capturing of the objectives, three models are formulated: growth is expressed as a function of size in the first equation, growth is expressed as a function of profitability in the second model, and size is expressed as a function of profitability in the third model. The technique of panel data model is employed to capture the three models and the results of the study reveal that there is independent relationship between growth and size of the firms which is in line with Gibrat’s law. The study also indicates positive relationship between the growth and the profitability of the firms but statistically insignificant because the probability statistic is greater than 0.01 and 0.05 but it is rather 0.875. Moreso, the study reveals negative relationship between firm size and profitability and the coefficient of determination ( ) which is 0.82 indicates that about 82% variations in size of the firms can be explained by the variations in profitability. Based on the findings, the study therefore recommends that government should put in place policy options that can enhance manufacturing profitability in order to boost the performance of the sector and create employment in Nigeria. Key Word: Size, Growth, Profitability and Manufacturing Companies
