Financing Decisions and Financial Stability: Moderating Effect of Firm Size of Listed Industrial Goods Firms in Nigeria

Edidiong Justine John., Samson Aluya and Michael Ogbuigwe
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Edidiong Justine John.: Department of Accounting, Faculty of Management Sciences, Akwa Ibom state university, Obio Akpa Campus, Akwa Ibom state
Samson Aluya: Department of Accountancy, Faculty of Management Sciences, Ignatius Ajuru University of Education, Rumuolumeni, Port Harcourt, Rivers State
Michael Ogbuigwe: Department of Accountancy, Faculty of Management Sciences, Ignatius Ajuru University of Education, Rumuolumeni, Port Harcourt, Rivers State

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 8, 3384-3401

Abstract: The ability to make savvy financing decisions is now a key differentiator for corporate firms seeking to outpace competition and achieve sustainable growth. In view of this, this study examined the moderating effect of firm size on the nexus between financing decisions and financial stability of listed industrial goods firms in Nigeria. The study employed Altman’s Z-score in evaluating the financial stability of listed industrial goods firms in Nigeria and a combination of debt-equity ratio, interest coverage ratio, and total debt ratio as key predictors. Altman’s Z-score assisted in gauging firms’ financial stability over the research period. Additionally, the natural logarithm of total assets was integrated into the analysis to further refine the predictive model and to achieve the study objectives. The study adopted an ex-post facto research design and utilized a panel data of one hundred and fifty (150) pooled observations gathered across a sample of ten (10) listed industrial goods firms in Nigeria over a period of fifteen (15) years (2009-2023). The study employed descriptive statistics tools, Pearson correlation analysis and Fixed effects regression technique via Eviews 10.0 statistical package in analyzing the data. The study findings revealed that with the moderating effect of firm size, debt equity ratio has an insignificant negative relationship {(Coeff. = -0.000247 (0.6571)} with financial stability of listed industrial goods firms in Nigeria while interest coverage ratio has a significant positive relationship {Coeff. = 2.322405 (0.0173)} with financial stability of listed industrial goods firms in Nigeria. It also revealed that total-debt ratio has an insignificant negative relationship {Coeff. = -0.002365 (0.4236)} with financial stability of listed industrial goods firms in Nigeria. It was thus concluded that firm size has a significant moderating effect on the relationship between financing decisions and financial stability of listed industrial goods firms in Nigeria. The study recommended, amongst others, that firms should consider their size when making financing decisions and adjust their strategies accordingly for enhanced financial stability, growth prospects, and overall success.

Date: 2024
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