IIARD International Institute of Academic Research and Development

IIARD International Journal of Economics and Business Management (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 10 NO. 7 2024
DOI: 10.56201/ijebm.v10.no7.2024.pg1.13

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Financial Structure and Cash Holding Level of Listed Consumer Goods Companies in Nigeria

Adebimpe O. Umoren, Ofonime O. Jeremiah, Eteyen Ikpong

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Abstract

One of the challenges that firms in Nigeria grapple with, is the issue of striking a healthy and dynamic balance between the implicit cost of holding excess cash and the consequences of illiquidity due to inadequate cash holding. This study was conducted to examine the influence of financial structure on the cash holding levels of listed consumer goods companies in Nigeria. Ex-post-facto research design was adopted involving the use of secondary data as published by ten (10) companies selected from the population of 21 consumer goods companies listed on the floor of the Nigerian Exchange Group (NGX) for the period 2012-2022. Descriptive statistics, simple linear regressions were used to analyze data collected. Cash and cash equivalent was used as the proxy for cash holding while firm size, leverage and debt-equity ratio were the proxy for financial structure. The result of the study indicated that firm size (? = .080, t = 13.342, p = .000) had a positive and significant influence on cash holding; leverage (? = -.009, t = -.166, p = .869) and debt-equity ratio (? = -.056, t = -.937, p-value = .351) had a negative and insignificant influence on cash holding level of consumer goods companies in Nigeria. Hence, it was concluded that of the three attributes considered, firm size exerts the most significant influence on the cash holding level of listed consumer goods companies in Nigeria. It was recommended that larger companies should assess their financial structure and consider the trade-offs between debt and cash holdings.

keywords:

Cash holding; Financial structure; Firm size; Leverage; Cash management

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