Financial Management Decisions and Firm Value in Nigeria

Abstract

This study examines the effect of, financial management decision on firm value in Nigeria. Data of 72 non-financial listed firms on the Nigeria Exchange Limited (NGX) within the periods 2016 to 2021 were analyzed with preliminary test of descriptive statistics and correlation analysis. Thereafter, the dynamic panel regression of system GMM methodology was adopted to ascertain the cause-effect relationship between our dependent variable and explanatory variables. Findings show that non-financial firms partially adjust to their optimal value at a relative slow speed by covering only 13% of previous year deviation. Also, previous year firm value, long term investment decision, financing decision and firm size significantly affect firm value. Short term investment decisions, dividend decisions and growth opportunity does not affect firm value during the studied period. Based on the research result, this study concludes that long term investment decisions, financing decisions and firm size are significant determinants of firm value in Nigeria.

Keywords: Capital Budgeting, Firm Value, Leverage, Dividend decision, System GMM