Effect of economic indices on the performance of listed multinational manufacturing companies in Nigeria

Ajuh Ali Iteh 1, Sunday Egbe Idaka 2, * and Gabriel Femi Goodwill 2

1 Department of accountancy, Faculty of Business Administration, University of Nigeria Nsukka, Enugu State, Nigeria.
2 Department of Accounting, Faculty of Management Sciences, University of Calabar, Calabar, Nigeria. \
 
Review
International Journal of Science and Research Archive, 2022, 07(02), 115–127.
Article DOI: 10.30574/ijsra.2022.7.2.0256
Publication history: 
Received on 24 September 2022; revised on 10 November 2022; accepted on 13 November 2022
 
Abstract: 
This paper examines the effect of economic indices on the financial performance of multinational manufacturing firms in Nigeria from 2004-2021. The Expo facto research design was adopted along with ordinary least squares, and other econometric tests to estimate the effect of the predictor variables on the response variable. The population comprises 22 listed multination manufacturing companies and 19 companies were used as the sample size which represents 86 percent of the population. We found that the exchange rate, inflation rate, and government capital expenditure all have a correlation with return on equity (ROE) based on the regression results, but other econometric parameters showed no significant relationships between the explanatory variables and ROE because a 1 percent rise in predictor variables results in a decrease in ROE. This is a clear indication that Nigeria’s economy is bleeding profusely due to the high exchange rate and the economy is still battling inflation coupled with infrastructural challenges. We recommended that to reduce the effect of the exchange rate, the Nigerian government should make the economic environment business-friendly by encouraging mass production and patronage of made-in-Nigeria in order to curtail the increase in the importation and adopt the public-private partnership (PPP) model to harness other mineral resources for export thereby putting cost-push inflation in check and the exchange rate. Also, the electricity supply should be improved to mitigate the costs of production which will also help address the inflation rate.
 
Keywords: 
Economic indices; Exchange rate; Inflation rate; Capital expenditure; Financial performance return on equity
 
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