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 55
- Downloads 0
How Competence, Training, and Career Development Affect the Achievement of Airfield Adisutjipto Jogjakarta Members
The competence efforts of air force members require the proper processing of human resources, so that the desired competencies can be achieved in accordance with expectations. Factors that will affect the competence of m...
The Effect of Knowledge, Ability and Information Technology on Organizational Performance at Rsau Dr. Esnawan Antariksa Halim Perdana Kusuma, Jakarta
The purpose of this study was to analyze the influence of knowledge, abilities and i(Ningrum, 2020) information technology on organizational performance in RSAU dr. Esnawan Space Halim Perdana Kusuma Jakarta, either simu...
Moderating Effect of Internet on Advertising and Performance of Small Business Enterprises in Nigeria
The extant literature showed that the relationship between advertising and the performance of small and medium enterprises (SMEs) is widely researched. However, there is a paucity of literature on the effect of different...
The Role of Customer Experience, Switching Barriers and Consumer Satisfaction in Improving Repurchase Decisions in Retail SMEs
This paper aims to examine and analyze the impact of customer experience, switching barriers and customer satisfaction on repeat purchase decisions in Balung Retail SMEs, Jember Regency. The population of this study were...
The Effect of Service Quality and Perceived Value to Loyalty through Satisfaction as a Mediation (Study at Camera Rent Equipment at Malang City)
The development of social media users with internet speeds that continue to increase, has also affected business opportunities in the field of visual photography and videography. Mostly, business people have turned out t...