Operating Cash Flow and Corporate Financial Performance of Listed Conglomerate Companies in Nigeria
Journal Title: IOSR Journal of Humanities and Social Science - Year 2018, Vol 23, Issue 2
Abstract
This study examines the impact of Operating Cash flow and Corporate financial performance of listed Conglomerate companies in Nigeria over a period of 10 years (2005 to 2014). Five listed Conglomerate companies from the population of six companies were studied. The study uses secondary data collected from the Annual Reports and Accounts of the sampled firms for the period of the study. The data were analyzed using descriptive statistics, correlation analysis as well as regressions techniques to determine the variation in financial performance due to the variation in operating cash flow. A Panel Data Regression Technique was employed since the data has both time series and cross sectional characteristics. Therefore, OLS and random effects regressions were applied to estimate the study models. The result shows a positive and insignificant impact between Cash Flow from Operating activities (CFO) and financial performance proxied by ROA while the impact is positive and significant when financial performance was proxied by ROE of the listed conglomerate companies in Nigeria. The control variable Size and Financial Leverage have a positive and negative significant impact on ROA respectively, while their impact on ROE is positive and insignificant. The study recommends that although increasing financial leverage reduces agency cost associated with equity. Listed Conglomerate companies in Nigeria should not rely more on financial leverage because excessive leverage has a negative impact on financial performance and increases risk of bankruptcy. These companies should set a policy so as to keep bankruptcy cost at a lower level and also Management efficiency is required in managing costs, increasing efficiency and financial performance of listed Conglomerate companies in Nigeria. For managers to be more effective and to become more prudent and avoid undertaking risky investments their equity participation should be increased.
Authors and Affiliations
Prof Muhammad Liman, Aminatu Sani Mohammed
Keywords
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- EP ID EP417297
- DOI 10.9790/0837-2302110111.
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