Trade-Off Variables and Market Value: An Estimated Panel Data Study of Quoted Small and Medium Scale Enterprises from Nigeria
Journal Title: Journal of Economics, Finance and Management Studies - Year 2021, Vol 4, Issue 08
Abstract
This study was undertaken to examine the relationship between trade off variables and market value of quoted small and medium scale enterprises in Nigeria. Secondary data obtained from financial statement of 10 quoted small and medium scale enterprises from 2009 – 2018. Market value was modeled as the function of, non-tax shield, business risk and tangibility. Panel data methods were employed while the fixed and random effects models were used as estimation technique at 5% level of significance. Fixed effects, random effects and pooled estimates were tested while the Hausman test was used to determine the best fit. Panel unit roots and panel cointegration analysis were conducted on the study. The study found that trade off variables has significant relationship with market value of the small and medium scale enterprises. From the regression summary, we conclude that, trade off variables have significant relationship with market value of the small and medium scale enterprises. We recommend that financial managers should institute sound, efficient and coherent capital structure management policies such that will enable them determine the right mix or combination of debt, equity or both that will enhance firms’ value in Nigeria. Firm should expand to a level it does not result to diseconomies of scale and the eventual fall in the value of the small and medium scale enterprises. Government and policy makers should provide an enabling market environment capable of enhancing easy source of capital to enhance firm value in Nigeria. Management of the small and medium scale enterprises should employ more of long-term debt than equity capital in financing their operations, because it results in higher small and medium scale enterprises value. Corporate financial decision makers should employ more of long-term-debt than equity in their financial option. This is in line with the pecking order theory. Management of the small and medium scale enterprises should compare the marginal benefit of using long-term-debt to the marginal costs of long-term-debt before concluding on using it in financing their operations. This is because as shown by this work, long-term-debt impact positively on firm’s value unlike equity capital.
Authors and Affiliations
Anyamaobi Chukwuemeka, Agilebu, Ogechi Michael
Keywords
Related Articles
- EP ID EP705514
- DOI 10.47191/jefms/v4-i8-13
- Views 129
- Downloads 0
Do Energy Access and Climate Change Worsen Poverty in West Africa? Empirical Evidence using Panel Analysis
This study examined how access to energy and climate change affect poverty level in some selected West African countries. To achieve the objectives of this study, the researchers collected data on energy access, electric...
Implementation of Image Management with Cyber Public Relations to Generation Z by Government Organization
The purpose of this study was to analysis Government Public Relation strategies in the Indonesian Ministry of Health to managing their positive image using the Cyber PR strategy by David Phillips and Philip Young, the Im...
Sharia Bank of Indonesia Stock Price Prediction using Long Short-Term Memory
This study explored the applicability of Long Short-Term Memory (LSTM) networks for predicting the closing prices of Sharia Bank of Indonesia stock. Utilizing historical data and a rigorous hyperparameter tuning process,...
The Influence of Financial Literacy, Financial Awareness, And Income On Financial Well-Being With Financial Behavior And Financial Inclusion As Intervening Variables (A Case Study On Families In Surabaya)
As a result of the Covid-19 pandemic, the Indonesian economy has been severely affected. Surabaya city's economy contracted by -4.85% in 2020 and by 2021 it grew to 4.29%. Surabaya's poverty rate in 2021 is 5.23%, or 152...
Demographic Characteristics of Insurance Agents and Intention to Leave the Life Insurance Business
The aim of the study was to try to determine the influence of gender characteristics, age, and seniority on the intention to leave the business of insurance agents. Through the qualitative research method, the research t...