CORPORATE LIQUIDITY DRIVEN PROFITABILITY: EVIDENCE FROM LISTED MANUFACTURING FIRMS IN NIGERIA

Abstract

This study examined the level at which corporate performance can be driven by active corporate liquidity management in the manufacturing sector of Nigeria. The study sought to unravel the relationship between active corporate liquidity management and profitability which has long presented a critical ground for debate among authors without reaching a consensus position. To this end, the study adopted expo-facto and inferential research designs with secondary panel and cross-sectional data generated from the Central Bank Statistical Bulletin and various annual reports of Nigerian quoted manufacturing firms. A sample size of fifteen listed manufacturing firms between the 2013 and 2019 periods was selected by judgment and purposive sampling techniques.  Data were analyzed using panel data regression analysis, Hausman Test, and correlational coefficient matrix and descriptive statistical methods respectively. Findings revealed the existence of a positive relationship between the firms’ return on assets and corporate liquidity measures. The result aligns with some previous findings, hence we hereby conclude that active corporate liquidity management can significantly drive corporate profitability in the manufacturing sector.  Sequel to this finding, it is suggested that manufacturing firms in Nigeria should explore realistic working capital management policies as well as active liquidity management strategies that will adequate liquidity position and enhance market value to the benefit of shareholders.