Board Meetings and Financial Performance of Insurance Companies in Nigeria (Published)
This study examined the impact of board activism on performance of quoted insurance companies in Nigeria. The study evaluates the effect of board meetings on the financial performance of 15 listed insurance companies existing on the Nigeria stock exchange between the period 2006-2017.Panel data regression and descriptive analysis was used to analyze the data obtained from the annual report of the sampled companies. The result of the study revealed a negative relationship with no significant impact between the board meeting and performance of insurance firms in Nigeria with emphasis on Return on Equity, Return on Asset and Tobin’s Q. It was suggested that regulatory authority focus their attention more on the skill and experience of directors at meeting of the board for good performance.
Keywords: Board, Insurance, Meetings, Nigeria, Performance
Accounting Information Systems and Small/Medium Scale Enterprises (SMEs) Performance (Published)
The importance of accounting information system in any organisation, especially the small and medium scale enterprises cannot be over emphasised. The accounting information systems employed by SMEs are very crucial to their performances. Due to lack of accounting information, SMEs however, make wrong decisions. In light of this problem, this study sought to determine the effect of accounting system on the performances of SMEs in Nigeria. The population of this study consists of the Small and Medium scale Enterprises (SMEs) in Festac – Town, Lagos. Data were extracted from 154 questionnaires administered with 80% retrieval success. The hypotheses were formulated and tested using regression analysis at 5 per cent level of significance (0.05).The data were analysed and interpreted using both descriptive and inferential statistics. The study found accounting information system having a significant positive effect on SMEs performance. In conclusion, accounting information systems employed by the managers/owners of SMEs were found to have contributed positively to their decisions and performances. We therefore recommended that users of accounting information should take cognizance of the quality of accounting information systems provided so as to aid their performance.
Keywords: Accounting information system. Decision making, Performance, Small and Medium Scale enterprises.
Analysing Dependent Variables with Multiple Surrogates in Financial Performance Research (Published)
Accounting and finance-based researchers often use multiple surrogates to capture the properties of a dependent variable (DV) when studying its predictive relationship with predictors. This often fail to directly connect the study results with the major objective of the research. This paper compares the existing practice with a plausible and less complicated alternative. Using logistic regression, the study converted the a priori expectations of 30 Ph.D research theses in finance and accounting with four dependent surrogates into a probabilistic log values and compared them with the individual surrogate performance on the one hand and the surrogates geometric mean on the other hand. While the geometric mean revealed close connection with the theses’ probabilistic expectations (β = .278, t(30) = .695, R2 = .077, p > .10), the individual surrogates results showed singular and combined significant differences with the theses’ a priori expectations (Adj. R2 = .0291, F(4, 25) = 22.598, p < .05). The paper recommends unifying multivariate DVs with geometric means for better conclusion in financial performance relational studies.
Keywords: Logistic regression, Performance, dependent variable, proxy, surrogate
Capital Structure: Definitions, Determinants, Theories and Link with Performance Literature Review (Published)
The theory of capital structure and its relationship with a firm’s value and performance has been a puzzling issue in corporate finance and accounting literature since the Modigliani and Miller theory (MM) (1958) argue that under the perfect capital market condition which assume that, if without bankruptcy cost and capital markets are frictionless, if without taxes, and without asymmetric information the firm’s value is independent from capital structure. According to MM theory, the only variables that determined firm value was its future earnings power (expected cash flow) and hence the capital structure decision is irrelevant. Since that time, several theories have been developed to explain the capital structure of a firm including the Pecking Order Theory, Trade off theory, and the Agency Cost theory. This paper will shed light on the concept of capital structure, its theories and link with firms’ performance.
Keywords: Capital Structure, Performance
The Impact of Working Capital Management on Corporate Performance: Evidence from Listed Non-Financial Firms in Ghana (Published)
Working Capital Management (WCM) plays a significant role in the successful operation of businesses due to its significant effect on corporate profitability and liquidity. This study empirically examines the impact of working capital management on the performance of non-financial firms in Ghana. Using secondary data of five listed non-financial firms for the period 2010-2015, the Random effect model was employed to establish the relationship that exists between the various components of working capital management and firm performance and whether these WCM components impact significantly on firm performance. The results show that average payment period and current ratio have a positive relationship with firm performance. Average collection period, inventory turnover, cash conversion cycle, and firm size on the other hand have a negative relationship with firm performance. However, only average collection period, average payment period, cash conversion cycle, and current ratio are found to have a significant impact on firm performance. The study recommends that managers of non-financial firms in Ghana should formulate sound working capital management policies that will enable firms to deal with liquidity challenges and enhance their performance.
Keywords: Non-financial firms, Performance, Working Capital Management
The Ex-post Evaluation of Investments in Accounting Information System: The Role of Content, Context and Process (Published)
Investments in Accounting Information System (AIS) play an important supporting role in most sectors of the economy. This study was designed to answer the question related to the roles of contextual factors, namely «content », « context» and « process» on the ex-post evaluation of investments in information technology. The model was tested using survey data collected from 269 companies. The results of analyzing structural equation support the proposed model and highlights positive and significant relationship of AIS investment and business performance of the companies. The same the analysis multiple groups also show the important moderating role of «content» , «context» and «process» on the relationship between AIS investments and business performance.
Keywords: Accounting Information System (AIS), Content, Context, Performance, Process
THE EFFECT OF COMMODITY PRICE CHANGES ON FIRM VALUE: STUDY OF FOOD AND DRINKS SERVICE INDUSTRY IN NIGERIA (Published)
This paper examines the effect of commodity price changes on firms’ value in the food and beverage industry in Nigeria given the frequent changes in the prices of raw materials and inflation. Using the descriptive survey research design, the study focused on secondary data obtained from the annual reports of 11 firms registered on the stock exchange, whose records provided the information required for the study. Revenue, cost of sales, and stock price were computed in order to represent company price of commodity from 2009 to 2013; while firm value comprises Earnings per Share, Earnings before Interests and Taxes and Total Assets. Findings indicate, a significant positive relationship between commodity price and firm value (p<0.05); a joint relationship between revenue, cost of sales, stock price and firm value (p=0.000); a positive slope (B= 0.221) suggesting that an increase in commodity price between 2009 and 2013, led to a proportional increase in firm value. This implies that due attention has to be paid to the issue of raw material sourcing and pricing in Nigeria. Conclusively, price fluctuation, no matter how little or much, will directly impact the price of raw materials and production of goods and services. Government and management of these industries need to pre-empt raw material price fluctuations in order to have a stable and progressive returns from investment. Arbitrary pricing of products is detrimental to progressive firm performance where market is competitive
Keywords: Firm Value, Performance, Price fluctuations, Relationship
EFFECT OF STRATEGIC MARKETING OF FINANCIAL SERVICES ON ORGANIZATION PERFORMANCE (Published)
This study focuses on the effect of strategic marketing of financial services on organization performance. The primary purpose of this study is to focus on the relationship between marketing strategies and banks performance. The research design adopted for this study was survey research design in which a sample was selected at random amongst the population of the study and used as respondents for the study. Questionnaires were used as an instrument of primary data collection. Stratified random sampling was used to select the sample. Simple percentages and frequency distributions together with Spearman’s rank correlation coefficient were used to analyze the data. The result of this study reveals that there is a significant positive relationship between the financial marketing services and profitability of First Bank of Nigeria Plc. Therefore, it is recommended that Banks should remove the communication gap that currently exists between the banks and their customers as most customers are not aware of the services rendered by their banks. Information can be provided through brochures, pamphlets, circular, adverts etc. The banks should devise ways of making it easy for customers to obtain information from banks.
Keywords: Financial Services, Marketing, Organization, Performance, Profitability, Strategic
A SECTORIAL ANALYSIS OF SUKUK MARKET BASED ON DETERMINANTS OF RISK AND RETURN PERFORMANCES (Published)
The present study attempted to identify different types of risks embedded in sukuk structure and to determine the impact of different types of risks on return of sukuk. Further, this study has also attempted to explore the relationship between market risk, credit risk, operational risk, liquidity risk and sukuk returns. Researcher collected data from the year 2005 to 2013. Data were collected on periodic basis for determining the impact of the diverse risks on sukuk returns daily. This study analyzed the data using line charts, descriptive statistics, correlation analysis, and regressions i.e. ordinary least square with F and t statistics. Results of this study revealed that NASDAQ sectorial basis sukuk index found to have four models which explain from 84% to 91 % of variations in returns. As such global sukuk return, sovereign sukuk return, corporate sukuk return and financial sukuk return are explained by 84%, 91%, 86% and 88% respectively. These results might also be affected by interest rate risk, inflation risk, dollar rate risk, maturity risk, credit risk & default risk, legal & Shari’ah compliance risk, liquidity risk, and reinvestment risk. These results provided support for the hypotheses and shown a relationship between total return and different type of risks. Since sukuk markets are becoming famous in globally developed countries which try to adopt Islamic sukuk for prevailing financial crisis, this study has many implications for the managerial and policy making level.
Keywords: Market, Performance, Return, Risk, sukuk structure
THE EFFECT OF LENDING METHODOLOGY ON PERFORMANCE OF LOAN PORTFOLIO AMONG SELECTED MICROFINANCE INSTITUTIONS IN KENYA (Review Completed - Accepted)
This paper examines the impact that lending methodology on the performance of loan portfolio based on a study of microfinance institutions in Kenya. The specific objectives of the study were to establish the effect of group and individual lending on performance of loan portfolio in micro-finance institutions, and to establish the effect of moderating factors on performance of gross loan portfolio. Secondary data was used in the study of 8 out of 56 microfinance institutions under umbrella Association of Microfinance Institutions of Kenya (AMFI). This was motivated by availability of data. Panel data analysis was applied to test hypothesis that there is no relationship between group lending on performance of loan portfolio. After running a regression in which loan portfolio performance is the dependent variable, the study found a positive significant coefficient of 0.79 and (p=0.42) on group lending without moderating factors. When moderating factors were included the coefficient becomes 0.38 and (p=0.19). The null hypothesis was therefore rejected. There was no significant relationship of individual lending on performance of loan portfolio in the regression despite finding a positive coefficient of 0.41 and (p=0.27) without moderating factors and 0.16 and (p=0.58) when moderating factors were added. Therefore, the author accepted the null hypothesis which states that there is no effect on individual lending on performance. The third hypothesis which stated that moderating factors do not affect performance of loan portfolio was also rejected, since the study found significant relationship between moderating factors and lending methodology on loan portfolio. From the regression results, transaction cost and credit risk have a negative relationship on the performance of gross loan portfolio/assets. The researcher recommends to MFIs to use group lending as a result of security/collateral as it reduces adverse effects. Furthermore managers should improve business performance through cost minimization strategies. It is further recommended that MFIs managers should consider diversifying their revenue generating activities rather than concentrating on only one source of income
Keywords: Kenya, Lending Methodology, Loan Portfolio, Microfinance Institutions, Performance