Free Cash Flow and Firms' Growth: An Empirical Investigation of Nigerian Quoted Non - Financial Firms

Akinleye, Gideon Tayo; Olarewaju, Odunayo Magret; Fajuyagbe, Kole Samson

doi:10.22610/jebs.v10i3.2332

Cited by 5 publications

(10 citation statements)

References 12 publications

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“…Finding from the study reveals that free cash flow is a positive predictor of share price of listed commercial banks in Nigeria. This finding contradicts prior studies of Akinleye et al (2018) and aligns with Mundia (2016).…”

Section: Discussioncontrasting

confidence: 94%

“…The financial performance indicators; net interest margin, economic value added, free cash flow used to explain share price of listed firms varies across empirical studies of developed clime (Endri, 2018;Silaban, 2017) and developing economies (Akinleye et al, 2018;Narayan and Reddy, 2018;Khan et al, 2016;Mundia, 2016). Also, similar studies in Nigeria; Idowu et al, (2018) focused on free cash flow on selected non financial quoted firms of while this study engaged free cash flow, net interest margin and economic value added, variables to investigate effects on share prices of listed money deposit banks in Nigeria, and this is the difference of this study.…”

Section: Introductionmentioning

confidence: 99%

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Effect of financial performance indicators on share price of listed commercial banks in Nigeria

Rotimi¹,

Nneka²,

Danladi³

et al. 2022

World J. Adv. Res. Rev.

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Placement of funds on the capital market could be confounding particularly when the market is unreadable in a blurred investment macroclimate riddled by unethical practices of all dimensions which naturally renders traditional financial indicators blinded. This study investigates effect of financial performance indicators on share prices of the thirteen listed commercial banks in Nigeria within the periods of 2010 to 2020. Net interest margin, economic valued added and free cash flow are the exogenous variables that proxy financial performance indicators. Study employs panel ordinary least squares because of the homogeneity nature of the cross sectional and time series data under observation while the Hausman test suggested random effect testing. Findings from the study revealed that while Free Cash flow has a positive significant effect, both economic value added and net interest margin have negative significant effect on share prices of listed money deposit banks in Nigeria. Study therefore recommends that Central Bank of Nigeria, policy makers in the financial circle, professional bodies and the academia to project financial indicators that are futuristic with demands for economic sustainability beyond profitability. This study also recommends that listed commercial banks should be more creative and innovative with value added products to scale up their interest incomes sources since investors’ appetite to safeguard funds cannot be over emphasized.

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Section: Discussioncontrasting

confidence: 94%

Section: Introductionmentioning

confidence: 99%

Effect of financial performance indicators on share price of listed commercial banks in Nigeria

Rotimi¹,

Nneka²,

Danladi³

et al. 2022

World J. Adv. Res. Rev.

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show abstract

“…Tochukwu and Hyacinth (2015) noted that inventory management is problematic and potent high risk capable of disrupting production and customer satisfaction. Some of the problems of inventory management include inconsistent tracking of products, inventory warehousing inefficiencies, inaccurate data management, inability to meet changing and increasing demand fluctuations, poor documentation, product stocking challenges and complexity in the supply chain management (Akinleye et al, 2018). Others include inefficient inventory processing and poor inventory control (Ahmed et al, 2018).…”

Section: Statement Of the Problemmentioning

confidence: 99%

“…In the same manner, inappropriately lowered inventory could as well be harmful to efficient inventory management. Therefore, inventory management requires that the manufacturing companies maintain a balanced and optimal inventory level in line with the requirements for the raw materials and in line with the storage space and production demands and inventory for the finished goods in line with the customers' requests and demands (Akinleye, Odunayo & Fajuyagbe, 2018;Nalubowa, Namango, Ochola & Mubiru, 2021). Inventory management would require striking a balance and keeping inventory costs to the least cost savings possibilities.…”

Section: Introductionmentioning

confidence: 99%

Markov Chain and Inventory Management of Manufacturing Companies in Nigeria

Ajibade¹,

Odunayo²,

Osunusi³

et al. 2022

EJCSIT

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The inability to adapt and accept the deployment of new technologies in solving inventory-related problems have been some of the challenges manufacturing companies face in Nigeria. Some studies have suggested that the use of the Markov chain is capable of improving inventory management, however, the capabilities and effectiveness of the Markov chain in enhancing inventory management in manufacturing companies remain quite unclear. This study reviewed the Markov chain and inventory management of manufacturing companies as used in prior studies. The study adopted an exploratory research design in reviewing prior studies using relevant materials from journals, periodicals and relevant documented materials. The study through the review observed that the Markov chain has the ability to improve inventory management in manufacturing companies. The study also recommended that managers in manufacturing companies should improve their inventory management and manufacturing operations by adopting quantitative and scientifically aided decision-making modelling for their inventory management systems, such as linear programming, stochastic programming, mixed integer programming, genetic algorithms and the Markov chain decision-making processes.

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“…Umrie et al (2019) menyatakan pertumbuhan aset merupakan manifestasi dari kemampuan manajer keuangan untuk mengambil keputusan terkait struktur kekayaan perusahaan. Oleh karena itu pertumbuhan aset perusahaan telah menjadi salah satu tolok ukur yang penting untuk mengukur keberhasilan perusahaan (Akinleye et al, 2018) Free cash flow dapat dimaknai sebagai arus kas yang benar-benar tersedia untuk didistribusikan kepada seluruh investor dan kreditor setelah semua kebutuhan dipenuhi untuk mempertahankan operasional perusahaan (Brigham & Houston, 2016). Selain itu, juga sebagai arus kas diskresioner yang dimiliki oleh suatu perusahaan yang dapat untuk menambah investasi, menutupi utang, membeli saham treasury, atau meningkatkan likuiditas (Weygandt, et al, 2015).…”

Section: Pendahuluanunclassified

Nexus free cash flow dan kebijakan dividen

Nastiti

2022

Jurnal Riset Ekonomi dan Bisnis

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Kebijakan dividen dan determinannya tetap menjadi isu kontroversial dalam literatur keuangan. Tujuan studi ini untuk menguji pengaruh langsung free cash flow terhadap dividen dan pengaruh tidak langsung free cash flow terhadap dividen melalui pertumbuhan perusahaan dan leverage. Sampel studi ini adalah 32 perusahaan manufaktur yang terdaftar di Bursa Efek Indonesia selama periode 2016-2020. Analisis data memanfaatkan regresi data panel fixed effect robustness dengan melibatkan 160 obeservasi. Hasil penelitian menunjukkan bahwa free cash flow terbukti secara signifikan berpengaruh positif terhadap dividen. Lebih lanjut, penelitian ini mampu membuktikan adanya pengaruh free cash flow terhadap leverage yang kemudian dilanjutkan dengan leverage berimplikasi pada pembayaran dividen perusahaan. Namun, pertumbuhan perusahaan tidak terbukti dipengaruhi free cash flow dan juga tidak mempengaruhi dividen sehingga tidak mampu berperan memediasi pengaruh free cash flow terhadap dividen. Penelitian ini secara akademis berkontribusi dalam mengintegrasikan variabel-variabel kunci determinan kebijakan dividen yang selama ini hanya diteliti secara terpisah. Sementara secara praktis, studi ini menyarankan bahwa bagi investor yang berorentasi pada dividen hendaknya mempertimbangkan ketersedian free cash flow dan ratio hutang perusahaan.Dividend policy and its determinants remain a controversial issue in the financial literature. This study aims to examine the direct effect of free cash flow on dividends and the indirect impact of free cash flow on dividends through firm growth and leverage. The sample of this study is 32 manufacturing firms listed on the Indonesia Stock Exchange during the 2016-2020 period. The data analysis employs fixed effect robustness panel data regression involving 160 observations. The results study showed that the free cash flow significantly positive affects dividends. Furthermore, this study can prove the effect of free cash flow on leverage and then leverage impacts on company’s dividend payments. However, the firm's growth was not proven to be influenced by free cash flow and also did not affect dividends so it was not able to play a role in mediating the effect of free cash flow on dividends. This research academically contributes to integrating the key determinants of dividend policy, which have only been studied separately so far. Practically, this study suggests that dividend-oriented investors should consider the availability of free cash flow and the firm's debt ratio.

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Free Cash Flow and Firms' Growth: An Empirical Investigation of Nigerian Quoted Non - Financial Firms

Cited by 5 publications

References 12 publications

Effect of financial performance indicators on share price of listed commercial banks in Nigeria

Effect of financial performance indicators on share price of listed commercial banks in Nigeria

Markov Chain and Inventory Management of Manufacturing Companies in Nigeria

Nexus free cash flow dan kebijakan dividen

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