Rise, Peak, and Decline: How Firm Lifecycle Impairs Return on Equity in Nigerian Consumer Goods Firms

Chitom Racheal John-Akamelu; PhD; Gilbert Ogechukwu Nworie; Ifeanyi Francis Osegbue; PhD

doi:10.56201/jbae.vol.11.no9.2025.pg77.88

📄 Download Paper

Rise, Peak, and Decline: How Firm Lifecycle Impairs Return on Equity in Nigerian Consumer Goods Firms

Chitom Racheal John-Akamelu, PhD, Gilbert Ogechukwu Nworie, Ifeanyi Francis Osegbue, PhD

Abstract

Many consumer goods firms in Nigeria experience fluctuations in return on equity (ROE) as they move through different stages of their lifecycle. Firms in the growth phase often achieve higher profitability, while those in maturity and decline phases struggle to sustain returns. Hence, the main objective of this study was to examine the effect of firm lifecycle, proxied by firm age, on return on equity among consumer goods firms in Nigeria. An ex-post facto research design was adopted. The study population comprised twenty (20) listed consumer goods firms in Nigeria. The study used secondary data obtained from the audited annual reports of fifteen (15) sampled consumer goods firms, covering the period from 2012 to 2024. The data were analyzed using the Period Seemingly Unrelated Regression (Period SUR) technique to correct for residual cross-section dependence and panel heteroskedasticity. The finding revealed that, at 1% level of significance, the transition of Nigerian consumer goods firms into the decline stage (proxy by increase in firm age) negatively affects their return on equity (? = -0.005816, p = 0.0000). In conclusion, aging organizations may experience diminishing efficiency in resource utilization, slower responsiveness to market changes, and increased exposure to competitive pressures, which collectively contribute to reduced returns. The study recommended that the board of directors and senior management of Nigerian consumer goods firms should focus on diversifying product lines, modernizing production processes, and investing in new technologies to counteract the decline in profitability associated with aging firms. By implementing strategies that enhance operational efficiency, reduce costs, and adapt to changing market demands, management can sustain or improve return on equity even as the firm progresses into later stages of its lifecycle.

Keywords

Firm LifecycleReturn on EquityConsumer Goods Firms

References

Akben-Selcuk, E. (2016). Does firm age affect profitability? Evidence from Turkey. International Journal of Economic Sciences, 5(3), 1-9. Efenyumi, P.-M. E., & Nworie, G. O. (2025). Tax planning and shareholder wealth maximization among listed banks in Nigeria. International Journal of Financial, Accounting, and Management, 7(1), 91–104. https://doi.org/10.35912/ijfam.v7i1.2756 Emeka, O., Kelvin, A. M., & Okeoghene, A. (2022). Corporate life cycle and financial performance: An empirical evidence on listed industrial goods firms in Nigeria. Journal of Global Economics, Management and Business Research, 14(3-4), 59-68. Ikelegbe, A. U., Ukoh, U. M., Efenyumi, P. E. & Nworie, G. O. (2025). Do more diligent boards engage in more tax planning? Evidence from the Nigerian agricultural sector. World Journal of Finance and Investment Research, 9(4), 15–28. https://doi.org/10.56201/wjfir.v9.no4.2025.pg15.28 Ismail, A. K. M., Donald, A. N., & Ibrahim, K. (2023). Effect of firm size and firm age on profitability: A study of listed industrial goods firms in Nigeria (2013–2022). Journal of Public administration (IJOPAD), 2(2), 30-44. Kallunki, J. P., & Silvola, H. (2008). The effect of organizational life cycle stage on the use of activity-based costing. Management accounting research, 19(1), 62-79. Modibbo, S., Abubakar, M., & Kumshe, H. (2024). Capital structure and financial performance of listed consumer goods companies in Nigeria. International Research Journal of Economics and Management Studies (IRJEMS), 3(7), 454–459. https://doi.org/10.56472/25835238/IRJEMS-V3I7P150 Mohammed, A., Abdullahi, M., Musa, A. B., Yahaya, A., & Zakariya, M. (2024). Organisational firm life cycle and firm value: Evidence from Nigerian nonfinancial firms. Akungba Journal of Management, 6(2), 99–110. Mueller, D. C. (1972). A life cycle theory of the firm. The Journal of Industrial Economics, 199-219. Okeke, N. M., & Nworie, G. O. (2025). A Free Cash Flow Theory perspective on the nexus between cash management and return on equity: Evidence from Nigerian food and beverage firms. IIARD International Journal of Economics and Business Management, 11(3), 14-27. https://doi.org/10.56201/ijebm.vol.11.no3.2025.pg14.27 Okpebenyo, W., Itabita, P. J., Yunusa, A., & Aduku, D. J. (2025). Exploring the nexus between corporate life cycle and financial performance of listed nonfinancial firms in Nigeria. Journal of Engineering, Management and Information Technology, 3(4), 241–256. https://doi.org/10.61552/JEMIT.2025.04.002 Onipe, A. Y., & Onyabe, J. M. (2021). Firm life cycle and financial performance: Evidence from Nigeria. International Journal of Accounting Research, 6(1), 8–15. https://j.arabianjbmr.com/index.php/ijar/article/view/178 Sam-Aleng, M., Ibrahim, G., & Samari, J. C. (2025). The impact of corporate life cycle stages on financial performance: Evidence from Nigeria listed firms. Journal of Accounting and Financial Management, 11(2), 336–355. https://doi.org/10.56201/jafm.vol.11.no2.2025.pg336.355 Umar, G., & Sylvanus, S. A. (2015). The relationship between firm age and and financial performance in Nigeria: A panel analysis. Journal of Sustainable Development in Africa, 17(3), 29-33. Yahaya, O. A., & Onyabe, J. M. (2020). Firm life cycle and financial performance: Evidence from Nigeria. Journal of Accounting and Finance in emerging Economies, 6(3), 723- 732.

Rise, Peak, and Decline: How Firm Lifecycle Impairs Return on Equity in Nigerian Consumer Goods Firms

Abstract

Keywords

References

More Articles from JOURNAL OF BUSINESS AND AFRICAN ECONOMY