AN EMPIRICAL INVESTIGATION OF DECISIONS AND FINANCIAL PERFORMANCE: A STUDY OF CONSUMER GOODS LISTED IN NIGERIA STOCK EXCHANGE

Abstract

Over the years, consumer goods in Nigeria have experienced mixed results in terms of financial performance despite their significance to the socio-economic growth and development in the country. The study investigates the Effects of Decisions and Financial Performance of 15 quoted Consumers Goods firms listed on the Nigerian Stock Exchange. Return on Assets proxied financial performance; Ratio of total currents to total current liabilities, proxied liquidity, Dividend payout ratio, proxied dividend, Ratio of total debts to total equity, proxied leverage decision, Ratio of total assets to total debt, proxied working capital decision, While Firm age serves as control variable which is defined as firms' incorporated period. The study uses an ex-post facto research design and longitudinal panel which consists of time series and cross-sectional data. The data were analyzed using descriptive statistics and regression. The study revealed that all explanatory variables, except liquidity decision and working capital decision, have a positive significant effect on financial performance. Specifically, dividend decisions employed, leverage, and firm age have an insignificant effect on financial performance. The study concludes that the explanatory variables affect Consumers firms' financial performance in Nigeria. Therefore, the study recommends that the management of Consumers Goods Companies in Nigeria should only use liquidity and working capital in their decision making as it enhances firms' financial performance and desists using leverage and dividend as part of their decision components. Finally, the management should not put firm age as one of their priority while brainstorming in their decision-making.