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Moderating Effect of Leverage on the Relationship Between Asset Structure and Financial Performance of Selected Manufacturing Companies in Nigeria

A. N. P. Onoja, M. T. Soomiyol, Dr. J. M. Korna, Prof. P.I Zayol

Abstract

The study examined the moderating effect of leverage on the relationship between asset structure and financial performance of selected manufacturing companies in Nigeria. The study adopted ex post facto research design based on secondary data of 9 listed industrial goods companies that were judgmentally selected out of a population of 13 companies from the Industrial Goods Sector. Data for the study span across 11 years from 2013 to 2023. The data are analyzed using a panel regression. The study found that current assets and Tangible Assets both have a positive and significant effect on economic value added of listed industrial goods companies in Nigeria, while Intangible assets have a positive but insignificant effect on the economic Value Added of listed industrial goods companies in Nigeria. On the other hand, non-current assets have a negative significant effect on economic value added of listed industrial goods companies in Nigeria. Furthermore, the study found that leverage does not moderate the relationship between current assets, intangible assets and tangible assets with economic value added, while on the contrary, leverage moderates the relationship between non-current assets and economic value added of listed industrial goods companies in Nigeria. The study recommends among others that, managers should consider leveraging financial structures to enhance the value generated from non-current assets, such as building, plant, property and equipment. Also, the strategic use of leverage can amplify the economic value added by improving the return on non-current assets investments, increasing growth and competitive advantage in the industry.

Keywords

LeverageAsset StructureFinancial PerformanceEconomic Value AddedManufacturing CompaniesNigeria.

References

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