Financing Policy and Net Book Value of Quoted Manufacturing Firms in Nigeria: A Multi-Variant Study

FINANCING POLICY AND NET BOOK VALUE OF QUOTED MANUFACTURING FIRMS IN NIGERIA: A MULTI-VARIANT STUDY

Dr. ADIBE, Francis Chikwendu

Department of Banking and Finance, Faculty of Management Sciences, Rivers State University, Nigeria

Dr. Ezebunwo Nyeche

Department of Economics, Faculty of Social Sciences, Rivers State University, Nigeria

ABSTRACT

This study examined the relationship between financing policy and net book value of quoted manufacturing firms in Nigeria. Panel data of 15 quoted manufacturing firms was collected from the annual reports of the manufacturing firms from 2010-2019.  Net book value of the quoted firms was modeled as the function of short term portfolio investment, subsidiary investment, long term portfolio investment and long term investment. Multiple regressions were formulated. Panel data methodology was employed while the fixed effects model was 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. Findings of the study proved 71 per cent of the systematic variation in the net book value of the quoted manufacturing firms. The beta coefficient found that total capital ratio, debt capital have negative relationship with net book value of the quoted manufacturing firms while equity capital, debt equity ratio and total capital ratio have positive relationship with the net book value of the quoted manufacturing firms. The probability coefficient found that debt equity ratio is statistically significant while total capital ratio, debt capital and total debt ratio have no significant relationship with net book value of the manufacturing firms. The study recommends that Quoted firms in Nigeria should be encouraged to maximize the use external financing.

Keywords: Financing Policy, Net Book Value, Quoted Manufacturing Firms, Nigeria, Multi-Variant Study

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Adibe, F.C & Nyeche, E. (2022). Financing Policy and Net Book Value of Quoted Manufacturing Firms in Nigeria: A Multi-Variant Study. African Journal of Business and Economic Development, 2(2), 7-27. Available online at: https://www.ijaar.org/articles/ajbed/v2n2/ajbed-v2n2-Feb22-p2201.pdf

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