Corporate Finance Theory and Profitability of Manufacturing Companies in Nigeria
Abstract
This study examined the relationship between corporate finance theory (CFT) and the profitability of manufacturing companies in Nigeria. Using a panel dataset of 15 manufacturing firms on the Nigerian Exchange Group (NGX) from 2018 to 2022, the study employed descriptive statistics, Pearson Product Moment Correlation (PPMC), and panel regression analysis to determine the extent to which these variables influence firm profitability. The findings revealed significant positive relationship between capital budgeting practices and profitability. Capital structure also showed a modest but positive influence on profitability. Working capital management had the strongest impact on profitability among the variables. The study concludes that integrated and theory-driven financial decision making significantly enhances the profitability of manufacturing firms in Nigeria. It recommends that corporate managers adopt rigorous capital budgeting techniques, maintain an optimal capital structure, and prioritize working capital efficiency. Policymakers and financial regulators are also encouraged to promote best practices in corporate financial management to foster sustainable firm performance and industrial growth in the Nigerian economy.
Keywords
Corporate finance theorycapital budgetingcapital structureworking capital managementprofitabilitymanufacturing firms
References
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