Firm Attributes, Macroeconomic Variables, and Performance of Listed Manufacturing Firms in Nigeria
https://doi.org/10.56225/ijfeb.v4i2.452
Keywords:
Macroeconomic Variables, Firm Attributes, Financial Performance, ManufacturingAbstract
The effect of firm attributes and macroeconomic variables on financial performance was assessed using a sample of 25 listed manufacturing firms in Nigeria from 2011 to 2023, employing the Two-step system generalized method of moments. Size, age, leverage, growth, and liquidity were the proxies of firm attributes, while interest rate, inflation rate, and exchange rate were the macroeconomic variables investigated. Size, leverage, growth, inflation rate, and exchange rate have a significant positive effect on financial performance; interest rate has a significant negative effect on performance, while age and liquidity have an insignificant negative effect on performance, as measured by the return on equity. Firm attributes and macroeconomic variables are important determinants of the firms’ financial performance. However, the macroeconomic factors are more relevant determinants of the firms’ performance than the firm specific attributes. Large-sized firms should continue to leverage on the benefits associated with the economies of scale to improve financial performance. Older firms should be opened to new technology and innovation and avoid unnecessary bureaucratic bottle necks in operations and decision making, so as to give room for enhanced financial performance. Firms should continue to trade-off the benefits of leverage with its associated costs to improve financial performance.
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