Apr 28, · The private sector, particularly consulting firms and scientific and technical companies, may offer the best chances for employment for economists. Research and This would help NI to reduce its dependence on government funding and develop more private sector jobs. Corporation tax Since , the government has eased the regulatory burden onto companies and has also reduced the corporation tax rate from 28% to 20% with onshore tax receipts increasing by over 20% over the same period Answer to Lab 9: Sets in the Java Collection Framework For this week's lab, you will use two of the classes in the Java Collection Framework: HashSet and
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The purpose of this paper is to explore the interrelationship between macroeconomic factors, firm characteristics and financial performance of quoted manufacturing firms in Nigeria. Specifically, the study investigates the effect of interest rate, inflation rate, exchange rate and the gross domestic product GDP growth rate, while the firm characteristics were size, leverage dissertation on recession on retail sector liquidity.
The dependent variable financial performance is measured as return on assets ROA. The study used the ex post facto research design. The population comprised all quoted manufacturing firms on the Nigerian Stock Exchange.
The sample was restricted to companies in the consumer goods sector, selected using non-probability sampling method. The study used multiple linear regression as the method of validating the hypotheses. The study finds no significant effect for interest rate and exchange rate, but a significant effect for inflation rate and GDP growth rate on ROA.
Second, the firm characteristics showed that firm size, leverage and liquidity were significant. The study has implications for regulators and policy makers in formulating policy decisions. In addition, managers may better understand the interplay between macroeconomic factors, firm characteristics and profitability of firms. Few studies have addressed the interplay of macroeconomic factors and firm characteristics in determining the profitability of manufacturing firms in the country and developing countries in general.
Egbunike, C. and Okerekeoti, C. Copyright ©Chinedu Francis Egbunike and Chinedu Uchenna Okerekeoti. Published in Asian Journal of Accounting Research.
Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution CC BY 4. Anyone may reproduce, distribute, translate and create derivative works of this article for both commercial and non-commercial purposessubject to full attribution to the original publication and authors. Micro and macroeconomic factors affect the performance of a firm. Microeconomic factors exist within the company and under the control of management; they include product, organizational culture, leadership, manufacturing qualitydemand and factors of production Broadstock et al.
Macroeconomic factors exist outside the company and not under the control of management; they include social, environmental, political conditions, suppliers, competitors, government regulations and policies Adidu and Olanye, Key economic factors include the Consumer Price Index CPIunemployment, gross domestic product GDPstock market index, corporate tax rate and interest rates World Bank Group, ; Broadstock et al.
These factors i. macro can pose a positive or negative threat to the performance of a firm. While micro factors are within the control of management, the macro factors are beyond the control of management Dioha et al. This dissertation on recession on retail sector evidenced from the crises in Latin America, East Asia, Russia and the global financial crisis in Issah and Antwi, And presently, the recession witnessed in Nigeria, which business analysts opined that led to the delisting of some companies, has brought to limelight the implications of macroeconomic factors on corporate performance Zeitun et al.
Also, increases in the nominal interest rate and inflation rate intensify the aggregate rates of failure or default Robson, ; Davis, ; Wadhwani, In most developing countries, for instance Nigeria, macroeconomic factors, such as hyperinflation and increasing exchange rates, are some of the factors affecting the performance of manufacturing firms Owolabi, However, the performance of a firm is not affected by macroeconomic factors.
According to the resource-based view RBVthe internal attributes of an organization determine its position dissertation on recession on retail sector the competitive environment Denizel and Özdemir, Industry and corporate specific factors have been shown to be significant determinants of corporate performance Oyebanji, ; Rajkumar, ; Akinyomi, ; Akintoye, The subject of financial performance has received significant attention from scholars Kaguri, dissertation on recession on retail sector, It has been of primary concern to various stakeholders in all forms of businesses because of its implications on organizational health and ultimate survival.
Therefore, its measurement and determining factors have gained increased attention, more especially in developing countries in the area of business and corporate finance literature Dioha et al.
Firms make several operational and strategic decisions which are usually moderated by the macroeconomic environment; these include financing decision, investing decision and operational decision Owolabi, dissertation on recession on retail sector, Thus, performance is often gauged from stability in the macro economy, such as exchange rate and inflation rate fluctuations, the CPI, level of government expenditure, interest rates, among others.
However, macroeconomic volatility is much higher in developing countries than developed ones Owolabi, For instance, the Nigerian economy has shown volatility in exchange rate, inflation, interest rate, among several others Agu et al.
Analysts opine that growth in the manufacturing sector is hindered negatively from high lending rates, which invariably is responsible for high cost of production Rasheed, Studies have extensively examined the effect of macroeconomic factors on firm performance in developed countries Barakat et al.
However, there is little empirical evidence how macroeconomic variables impact on the performance of manufacturing firms in Nigeria Owolabi, In Nigeria, major macroeconomic indicators have shown significant fluctuations over time, more especially as the country emerges from recession. For instance, inflation rate as measured by the CPI is presently at double-digit level Exchange rate increased tremendously from to over as at April In a communiqué issued in April dissertation on recession on retail sector, the Central Bank of Nigeria CBN Governor Mr Godwin Emefiele raised its money supply growth forecast for to The CBN had earlier projected a money supply growth of The GDP at current basic prices has also steadily increased.
Studies have extensively focused on the banking sector Ogunbiyi and Ihejirika, ; Osamwonyi and Michael, dissertation on recession on retail sector, However, survival and growth of firms also depend on interaction of macroeconomic factors and firm characteristics.
Using data from nine African countries, Lemma and Negash found evidence that income level, growth rate and inflation influence the capital structure of firms. However, this is further affected by industry- and firm-specific characteristics. Ghareli and Mohammadi reported mixed findings for the effect of firm-specific characteristics on financial reporting quality. Studies have also substantiated the effect of firm characteristics on financial performance Dioha et al.
For instance, firm characteristics such as firm age Swiss,firm size Malik,liquidity Dogan, and leverage Mule and Mukras, have been associated with profitability. The recent study by Foyeke et al. Thus, given the interaction of the two factors in determining dissertation on recession on retail sector, there is a need for additional evidence on the joint association between macroeconomic factors, firm characteristics and financial performance in developing countries Adeoye and Elegunde, More so, Izedonmi and Abdullahi have shown that the influence of macroeconomic factors varied from sector to sector.
Therefore, there is a need to examine using such firms from the consumer goods sector. Therefore, the thrust of this study is to examine macroeconomic factors, firm characteristics and financial performance of selected manufacturing companies in Nigeria. The main objective of the study is to explore the interrelationship between macroeconomic factors, firm characteristics and financial performance of quoted manufacturing firms in Nigeria.
The study intends to achieve the following specific objectives: to examine the effect of interest rate on return on assets ROA of consumer goods manufacturing firms. The macro environment looks at forces surrounding a firm that have the potential to affect the way it operates Davis and Powell, The Institute of Chartered Accountants ICAN opined that it can be viewed as a set of factors or conditions that are external to the firm but which can influence the operations of the firm.
The macro environment refers to those dissertation on recession on retail sector and forces which are external to the firm and are beyond the individual business unit, but they all operate within it Taher et al. Duncan opined that the external business environment refers to the totality of factors outside an organization that are taken into consideration by an organization in its decision making.
These factors depend largely on the complexity and dynamism of the environment Duncan, ; Dess and Beard, The external business environment is classified as being stable when it does not show any changes, unstable when it shows relative changes and dynamic when it shows changes continuously Aguilar, Studies have indicated changes in the value of financial assets to be responsive to macroeconomic factors such as inflation rate, exchange rate, interest rates, GDP, money supply, unemployment rate, dividends yields and so forth Fosu et al.
The study focused on the following selected macroeconomic variables: interest rate, inflation, dissertation on recession on retail sector rate, money supply and GDP Table I. Crowley defined interest rate as the price a borrower pays for the use of money they borrow from a lender or fee paid on borrowed assets.
Ngugi described interest rate as a price of money that reflects market information regarding expected change in the purchasing power of money or future inflation. Economists argue that interest rate is the price of capital allocation over time; monetarist use the interest rate as an important tool to attract more saving, as increases in the interest rates attract more savings and the decrease in interest rate will encourage investors to look for another investment that will generate more return accordingly Murungi, That interest rates are important because they control the flow of money in the economy.
High interest rates curb inflation but also slow down the economy. Low interest rates stimulate the economy, but could lead to inflation. The lending interest rate percent in Nigeria was reported at The rate was marginally higher than periods prior, dissertation on recession on retail sector.
In Nigeria, Acha and Acha examined the implication of interest rates on savings and investment and reported that interest rate was a poor determinant of savings and investment. While Obamuyi and Olorunfemi proved that financial reform and interest rates had significant impact on economic growth in Nigeria. At the firm level, Khan and Mahmood showed that the financial structure of some industry makes firms in that industry more susceptible to interest rates volatilities than others. Barnor found a significant negative effect of interest rate on stock market returns of listed firms in Ghana, dissertation on recession on retail sector.
Jhingan defined inflation as a persistent rise in the general level of prices. Akers stated that inflation rate measures changes in the average price level based on a price index.
Inflation can be measured in several ways; however, two commonly used measures are the GDP Deflator or a CPI indicator. The GDP Deflator is a broad index of inflation in the economy; the CPI measures changes in the price level of a broad basket of consumer products. The CPI measures average retail prices that consumers pay. A high or increasing CPI indicates existence of inflation.
Higher prices tend to reduce overall consumer spending which, in turn, leads to a decrease in GDP while inflation itself is not negative, rapidly increasing rates of inflation signal the possibility of poor macroeconomic health.
Economists distinguish between two types of inflation: demand-pull inflation and cost-push inflation. Cost-push inflation, on the other hand, occurs when prices of production process inputs increase. Rapid wage increases or rising raw material prices are common causes of this type of inflation.
Inflation rate is primarily measured in Nigeria as the percentage dissertation on recession on retail sector in the CPI which has the food and core index, to give the headline inflation. The CPI measures the price of the representative food and services components such as food, alcoholic beverages, energy, housing, dissertation on recession on retail sector, clothing, transport, health, communication, transport, etc.
Figure 1. Several studies have shown a negative effect of inflation on economic growth. For instance, the study by Usman and Adejare in Nigeria reported a negative relationship between market all share index, market volume and GDP with inflation.
Similarly, Alimi reported a deleterious effect of inflation on financial development; proxied as broad definition of money as ratio of GDP; quasi money as share of GDP; and credit to private sector as share of GDP.
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