Effect of Corporate Reserve on the Financial Performance of Listed Industrial Good Companies in Nigeria

Clement Ejiofor Okeke and Ifeoluwapo A. Oyewobi

MPRA Paper from University Library of Munich, Germany

Abstract: The Nigerian Industrial sector contributed 19.02% of the country’s GDP by the end of Q4 of 2022 according to the National Bureau of Statistics. The sector has the potential to do more in terms of lifting the nation’s economy to a greater height and its financing structure is key in revolutionizing the profitability of firms in that sector, especially the Industrial Goods Firms. This study’s goal is to review the effect of cooperate reserve on the financial performance of firms in the industrial goods sector as measured by their Earnings Per Share (EPS) with firm size added as a control variable. For a period of ten (10) years, from 2013 to 2022, the study used eight (8) listed industrial goods companies in Nigeria. The study used an ex-post facto research approach and secondary data were gathered from the companies’ annual reports for the period under review. E-views version 10 was used to do correlation and regression analysis. The findings show that retained earnings have a negative and insignificant effect on financial performance while capital reserves have a positive and significant effect on the financial performance of listed industrial goods firms in Nigeria. The study suggests that the firms should desist from keeping large sums as retained earnings.

Keywords: Retained Earnings; Capital Reserve; Earnings Per Share; Financial performance; Industrial Goods (search for similar items in EconPapers)
JEL-codes: G1 G11 G3 M0 M1 (search for similar items in EconPapers)
Date: 2024-06
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Published in International Journal of Management Science Research (IJMSR) (2024): pp. 4-6

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