FIRM CHARACTERISTICS AND FINANCIAL PERFORMANCE OF LISTED CONSUMER GOODS COMPANIES IN NIGERIA

Abstract

This study examined the influence of firms’ characteristics on financial performance of listed consumer goods companies in Nigeria from 2011 to 2020. The data for this study were obtained from secondary sources. The secondary data consists of data on the dependent and independent variables of the study among which are the data on the firm’s profitability including (Return on Asset) ROA, Net Profit Margin (NPM) and Earning Per Share (EPS), and firm’s financial performance proxied by financial leverage, firm size and firm age. These data were wholly sourced from annual reports and financial statement of the individual companies for the periods covered. The hypotheses of this study were tested using static panel regression technique which measured the extent to which financial leverage, firm size and firm age influence the profitability of the sampled firms. The study found firm size to be positively associated with the profitability of listed consumer goods firms in Nigeria. In addition, it also found that age of the firm is negatively associated with the profitability of listed consumer goods firms in Nigeria. Since the study found that larger firms recorded higher profitability, it was recommended that management and other stakeholders of consumer goods firms in Nigeria should invest in their expansion so as to gain advantage of economies of scale which will improve their profitability. It was also recommended that since older firms had lower profitability compared with the younger firms, consumer goods firms should increase their investment in innovative projects that will make them compete favourably with innovative younger firms.