IIARD International Institute of Academic Research and Development

Journal of Accounting and Financial Management (JAFM )

E-ISSN 2504-8856
P-ISSN 2695-2211
VOL. 10 NO. 4 2024
DOI: https://doi.org/10.56201/jafm.v10.no4.2024.pg189.218

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Market Risk and Firm Financial Performance of Agricultural and Oil and Gas Firms in Nigeria

Isibor, Ogenchukwu Naomi, Ofor, T.N. (Ph.D), Sunday, David

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Abstract

The study examined the effect of market risk on financial performance of agricultural and oil and gas firms in Nigeria. The independent variables of this study are foreign exchange risk, equity price change, interest rate risk and commodity price change and dependent variable is return on investment. The study adopted Ex-post facto research design. The population of this study consists of 23 listed agriculture and oil and gas firms in Nigeria Exchange group as at 31st December, 2022. The study used 14 companies as sample size out of the total population. The study used secondary data, secondary data used were collected from annual financial reports of the sampled companies for eleven years period spanning from 2012-2022. Robust Random Effect Model was developed to test the effect between dependent and independent variables. It was operated using EVIEWS 9. The results of the Robust Random Effect Model revealed that, Foreign exchange rate change has a positive significant effect on the financial performance (ROI) of sampled firms in the Nigerian exchange group (P<.5), Equity price change has a positive significant effect on the financial performance (ROI) of sampled firms in the Nigerian exchange group (P<.5), Interest rate change has a negative insignificant effect on firm performance (ROI) of sampled firms in the Nigerian exchange group. (P>.5) and Commodity price change has a negative significant effect on the performance (ROI) of sampled firms in the Nigerian exchange group. (P<.5). The study concluded that the financial performance (ROI) of the targeted firms is largely determined by rise in Foreign exchange rate change and Equity price and fall in commodity price change. The study

keywords:

Market risk, Foreign Exchange Risk, Interest Rate Risk, Equity Change Risk and Commodity Risk

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References:

Abubakar, A., Dantsoho, M.A., & Sadiq, S.A. (2021). Market risk and financial performance of
listed oil and gas firms in Nigeria. International Conference on Economics,
Entrepreneurship and Management 2021.

Agubata, S.N., & Odubuasi, A. (2021). Market risk and earnings capacity of agricultural firms in
Nigeria. European Journal of Accounting, Auditing and Finance Research. 9 (9).30-40.

Ahmet, S. (2016). Systematic Risk in Conventional and Islamic Equity Markets. International
Review of Finance, 16(3), 457-466. https://doi.org/10.1111/irfi.12077.

Abhay, N. (2019), “Types of risks faced by microfinance institutions”, India Microfinance,
available at: https://indiamicrofinance.com/y/market-risk/

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