Effect of Asset Tangibility on Financial Performance of Manufacturing Firms in Nigeria

to relevant scholarly literature, existing theory that is use for a particular study. There are many theories on firm specific factors depending on the variables of study. According to Nusrat, (2022) theories are categorized based on the specific relevance of each theory to the study. The theoretical linkages between the independent variables and financial performance are grounded in several economic and management theories. Asset tangibility and financial performance can be discussed using the Resource-Based View Theory which posits that tangible assets can serve as critical resources providing competitive advantage and financial stability (Barney, 1991). Asset turnover is associated with Operational Efficiency Theories, suggesting that effective utilization of assets enhances revenue generation and profitability (Deloof, 2019). The idea is that a business can produce more output with fewer resources. This is achieved by improving internal processes and performance. Liquidity is linked to the theory of Working Capital Management. Working capital management aims at more efficient use of a company’s resources by monitoring and optimizing the use of current assets and liabilities, thereby, aiming at profitability and solvency. It aims to ensure that a company can afford its day-to-day operating expenses while, investing the company’s assets in the most successful direction possible with the aim of making profit and remain solvent. While, financial leverage can be discussed using the Perking Order Theory which posits that firm select financing sources starting with the cheapest source (internal sources) to debt, and finally to the most expensive source of finance, equity (Myer & Majluf, 1984). Thus, the theories underpinning this study shall be; a. Resource-based View Theory, b. Operational Efficiency (OE) Theory, c. Working Capital Management Theory, and d. Perking Order (PO) Theory. Methodology Research Design This study adopted the ex-post facto “after the fact” research design. The ex-post-facto research design is a method in which groups with qualities that already exist are compared on some dependent variables. It is considered a quasi-experimental design because the subjects are not randomly assigned, rather, they are grouped based on a pre-existing particular characteristics or traits. The ex-post-facto research is conducted on the bases of the cause that has led to its effects in which the focus of the researcher is on the phenomena, behavior, event or situation that has already occurred. The causal relationship is analyzed to determine the best reason(s) that led to the effect. Thus, the ex-post facto research design is considered appropriate because it determine the relationships and degree of influence that permit predictions. The design would help to investigate the possible relationships among the various independent variables . In this study, the IVs are (assets tangibility, assets turnover, liquidity, financial leverage and firm size) and moderating assets tangibility, moderating total assets turnover, moderating liquidity and moderating financial leverage. The dependent variable (DV) for the study shall be return on asset . Firm size, a construct of firm specific shall be used as the Moderator (MV). Thus, this study intends to measure five distinct independent variables and four moderating variables to one dependent variable (DV) as well as assessment of the relationship between or among these various variables concerned. JAFM JAFM Population of the study The population of the study is the total number of manufacturing companies listed on the Nigeria Exchange Group as at 31 December 2025 which is 50. The sample size consists of 17 manufacturing firms for a period of 10 years giving us 170. The manufacturing firms in Nigerian financial sectors of the economy are broadly categorized into; agriculture, conglomerates, construction and real estate, consumer goods, healthcare, industrial goods, natural resources, oil and gas. Sources and Methods of Data Collection Data where be collected from secondary sources. The data shall be extracted from the companies’ published annual financial statements and the Nigeria Exchange Group Fact-Book. The financial information necessary for the study shall be extracted from the statement of comprehensive income and statement of financial position of the respective non- financial firms for each respective year under review. Techniques of Data Analysis Panel Least Square Regression Technique was used to examine the model of the study. This technique was used to analyze two dimensional cross-sectional and Longitudinal unbalanced panel data. This technique captures and address relationship of the data to be collected from the secondary sources and allows empirical tests of a wide range of hypotheses and controls to be carried out for unobserved or unmeasurable sources of individual heterogeneity that vary across individuals but do not vary over time. Additionally, the panel least squared regression allows a researcher to capture the combined effect of the variables that may not be captured if Ordinary Least Squared regression technique is used to analyze the same variables individually. Furthermore, because the study involves moderation, Linear Multiple Regression Analysis shall be carried out to test for significant interactions between the moderating IV and DV, thereby, testing for moderating effect of the moderator on the variables. The ultimate target of the multiple regression approach is to achieve the best linear unbiased estimator estimations by maximizing the coefficient of determination (R-squared) and achieved a model fit that yields the least estimator error. The independent variables of firm specific factors for this study are, 1. Asset tangibility, 2. Asset turnover, 3. Liquidity management, 4. Financial Leverage, 5. Firm size. 6. Financial Performance. ii. The dependent variable (DV) to measure performance shall be, return on asset . iii. The moderating variable (MV) shall be Firm size iv. The control variables (CV) held constant throughout the study to stabilize the model and ensure model misspecification are Firm age (F-Age) Model Specification. The econometric model was used. It was propounded by Prof. Ragnar Frisch and Prof. Jan Tinbergen who were described as the Father of econometric equation (Britannica Encyclopedia, 2025). This study adopted the econometric model equation by these two Fathers of Econometric; JAFM JAFM Where;- Yit = Performance, proxy by Return on Assets as Dependent Variable (DV) i = denotes the firm (cross-sectional dimension), t = denotes time (time series dimension), βo = is constant, β = is the coefficient of the explanatory variables of heterogeneous dimension), X = is the explanatory variables, Z = Moderating variable μ = is the error (ε) term Where; ROA = Financial Performance = (Dependent Variable) TANG = Assets Tangibility = (Independent Variable) TATO = Total Assets Turnover = (Independent Variable) LIQD = Liquidity = (Independent Variable) LEVE = Leverage = (Independent Variable) FSIZE = Firm Size = (Independent Variable) FSIZE = Firm Size = (Moderating Variable) FAGE = Firm Age = (Control Variable) β0 = Constant β1 – β10 = Coefficient of the Parameters μ = Error Term thereby, testing for moderating effect of the moderator on the variables. Moderation analysis is when the moderator is expected to exert its effect on the specific structural path(s). A simple moderation effect can be assessed by creating a moderated regression model that explains whether a moderator alters the strength or/and direction of the relationship between an antecedent (independent variable). The main objective of moderation analysis is to “measure and test the differential effect of the independent variable on the dependent variable as a function of the moderator” (Baron & Kenny, 1986, p. 1174). Control Variable: Control variables shall be introduced to stabilize the model, avoid model misspecification and to recognize other factors that affect firm performance other than the variables of study. For the purpose of this study, the control variable shall be firm age . This variable shall be introduced to give effect for the differences in age and to give recognition to the fact that assets tangibility of financial performance of manufacturing firm in Nigerian. Results and Discussions The purpose of this study is to developed effect of Assets tangibility of financial performance of Manufacturing Firms in Nigeria, the section shall set out the steps and procedures to be followed in analyzing the factors that affect the financial performance of financial firms in Nigeria. Data Presentation and Analysis Kothari (2022) Define data analysis as the ordering and breaking down of data into constituent parts. It involves the conversion and processing of data generated in the study into information JAFM JAFM The data collected shall be presented on tables with corresponding percentage for each response. The whole table shall thereafter be analyzed and explained. The formulated hypothesis were tested using Chi-square method of data analysis at the level of significance of 0.05. • X2 = ∑ (O-e)2 E Where X2 = Chi-Square ∑ = Summation O = Observed frequency e = Expected frequency Research Question One Est Of Hypothesis One Restatement of Hypothesis one Ho1 Asset tangibility has no significant effect on financial performance of manufacturing firms in Nigerian. QUESTION SA A D SD TOTAL 13 80 88 2 0 170 20 77 83 7 3 170 TOTAL 157 171 9 3 340 Decision Since the calculated value of X (7.82) is less than the critical table value of X (9.44). Since the Financial Performance of value of assets tangibility of Manufacturing Firms in Nigeria is less than the critical table value. Hence, we reject the Null hypothesis which state that Asset tangibility has no significant effect on financial performance of manufacturing firms in Nigeria. Test of Hypothesis Two Restatement of hypothesis two HO2 Total asset turnover has no significant effect on financial performance of manufacturing firms in Nigerian Table for Research Question Two QUESTION SA A D SD TOTAL 36 69 99 1 1 170 37 83 75 10 2 170 TOTAL 152 174 11 3 340 Decision Since the critical table value of X2 = 7.82 and is less than the calculated value X2 = 12.92. Hence, and test the method using selected do not have the performance on assets Tangibility of manufacturing firms in Nigerian, we reject the Null hypothesis, this implies that QUESTION SA A D SD N DF % ALX TABX DECISION 13 80 88 2 0 170 3 0.05 9.44 7.82 Reject HO 20 77 83 7 3 170 TOTAL 157 171 9 3 340 JAFM JAFM Implementation and test the method using selected has the performance on assets tangibility of manufacturing Firms in Nigerian. Test of Hypothesis Three H03 Liquidity management has no significant effect on the financial performance manufacturing firms in Nigerian. Question 3 shall be used to test the hypothesis TABLE FOR RESEARCH QUESTION THREE QUESTION SA A D SD TOTAL 7 70 98 1 1 170 21 81 77 10 2 170 TOTAL 151 175 11 3 340 Decision Since the critical table value of X2 = 7.82 and is less than the calculated value X2 = 11.04. Hence, we reject the Null hypothesis, this implies that differences in goals between employees create conflict that affects productivity. QUESTION SA A D SD N DF % ALX TABX DECISION 7 70 98 1 1 170 3 0.05 11.04 7.82 Reject HO 21 81 77 10 2 170 TOTAL 151 175 11 3 340 Conclusion and recommendations This study investigates the determinants of assets tangibility of listed industrial goods firms in Nigeria for the period 2015 to 2025. The specific objective was to examine the effect of growth prospect, leverage financing and firm size on the asset tangibility of listed industrial goods firms in Nigeria. The study found that growth prospect has positive and significant effect on the asset tangibility of listed industrial goods firms in Nigeria, leverage financing has positive and significant effect on the assets tangibility of listed industrial goods firms in Nigeria and firm size has positive and significant effect on the assets tangibility of listed industrial goods firms in Nigeria. Firstly, the study found evidence that growth prospects positively and significantly influences the assets tangibility of listed industrial goods firms in Nigeria. Thus, the study concludes that larger growth prospect directly affects the assets tangibility of listed industrial goods firms in Nigeria. Secondly, the study also found evidence to suggest that leverage financing increases the assets tangibility of listed industrial goods firms in Nigeria. The study concludes that if firms financing is done using debts there will be improvement in the asset tangibility of the firms and of course that of listed industrial goods firms in Nigeria. Thirdly, the study found evidence to suggest that firm size increases the asset tangibility of listed industrial goods firms in Nigeria. The study concludes that firm size will improve the assets tangibility of listed industrial goods firms in Nigeria. QUESTION SA A D SD N DF % ALX TABX DECISION 36 69 99 1 1 170 3 0.05 12.92 7.82 Reject HO 37 83 75 10 2 170 TOTAL 152 174 11 3 340 JAFM JAFM Recommendations In line with the finding by this study, it is recommended that management and other relevant stakeholders in industrial goods sector in Nigeria should ensure that the growth prospects are reasonable enough, regulatory authorities should explore the possibility of increasing the leverage of industrial goods firms and ensure that industrial goods firms that have been in operation for a very long time are properly monitored as their lengthy period of operation has impact on asset tangibility. Finally, efforts should be made by industrial goods firms in Nigeria to enhance their assets tangibility by identifying all factors that contribute to the enhancement of asset tangibility. Asset’s tangibility influences financial performance through its impact on financing ability, Operational flexibility, cost structure the direction and strength of this effect depend largely on firms industry, management strategy and stage of development. JAFM JAFM References: Abubakar, A. (2020). Leverage financing and financial performance of oil and gas companies in Nigeria. Available at https//: openjournalsnigeria.org.ng/pub/ojms20200103 Abubakar, A. (2017). Financial leverage and financial performance of quoted industrial goods firms in Nigeria. KASU Journal of Management Science, 8 (2), 89- 108. Abubakar, A., Maishanu, M. M., Abubakar, M. Y., & Aliero, H. M. (2018). Financial leverage and financial performance of quoted conglomerate firms in Nigeria. Sokoto Journal Management Studies, 14 (1), 85- 100. Campello, M., & Giambina E. (2021). Capital structure and the redeploy ability of tangible assets. Tinbergen Institute Discussion Paper, No.11-091/2/DSF24. 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