Impact of Financial Control Mechanisms on Profitability Performance: A Case of Manufacturing Firms in Nigeria

Abstract

Over the years, the success of manufacturing industries has attracted the attention of academicians, managers and other professionals. This is cardinal because identifying the key success factors of manufacturing firms' profitability will allow for designing of tailored policies and strategies that will significantly improve the overall performance of the sector. (Siyanbola, 2013). In spite of the seeming increased attention in the running of the manufacturing sector in Nigeria, together with the institutional support to sustain this sector, performance in some have appeared to be below expectations. (Adebayo and Onyeiwu, 2018) Profitability is a concept that has received serious attention all over the globe, this is because the growth and development of any profit-oriented business enterprise depend on its ability to remain profitable at all times, even in the period of the visible current financial crunch of the world economy. Siyanbola and Raji, (2013) stated that profitability has attracted considerable importance in finance and accounting literature. Also, Malik, (2011), have emphasized profitability has been one of the primary objectives of financial management and control which is to maximize the owners' wealth. Hence, profitability is cardinal determinants of performance for wealth maximization. A business that is not profitable cannot survive in the long run. Furthermore, the current intensity of competition in the business environment has made running a successful business a function of its ability to be profitable and survive. Therefore, the ultimate goal of a business is to earn enough profit to ensure sustainability in prevailing market conditions. (Adebayo and Onyeiwu, 2018). Moreover, the effectiveness and efficiency of a firm's utilization of resource can be measured by its profitability. Profit is a key factor. This is because the more profit reflects a more effective and efficient utilization of resources and vice versa. Low profitability can slow the rate at which a firm progresses and certain obligations and at times target might not be met (Adebayo and Onyeiwu, 2018). It is, therefore, to achieve effectiveness and efficiency that Harley and Emery, (2016) concluded that a detailed control over a number of parameters is required to access the financial Abstract: Financial control function has become an issue of paramount concern for every firm that strives to achieve profitability, growth and survival in a dynamic business environment. This is because a quality financial control system is essentially a hallmark for efficiency and effectiveness in operations which snowball to superior performances. This study investigated the impact of financial control mechanisms on the profitability performance of Nigerian manufacturing firms and seeks to suggest valuable recommendations which can improve better performances in the sector. The study population was 275 and a sample size of 125 drawn from the population using simple random sampling technique. Data were collected by means of questionnaire (101 re...

Financial Management and Firms’ Profitability: Evidence from Nigerian Manufacturing Listed Firms

“…Hence, it appears vital that research on the manufacturing sector is conducted to examine firms' ability to bring in multiplier factor effects in restoring a depressed economy like Nigeria and their capability of exploiting the country's resources in order to establish a healthier economic condition. A firm's profitability is used to indicate the health of a firm's business performance and measures a firm's efficiency in the deployment of its assets and capital resources to generate positive returns (Ibrahim & Mustapha, 2019). It illustrates an organizational accomplishment over the period of business operations, which may be used as a benchmark of progression across different industries and sectors (Rao et al, 2011).…”