ASSET GROWTH AND PROFITABILITY OF LISTED MANUFACTURING COMPANIES IN NIGERIA: EVIDENCE FROM POST ADOPTION PERIOD OF IFRSs
Authors/Creators
- 1. Senior Lecturer, Department of Accounting, Faculty of Business Administration, University of Uyo, Uyo, Akwa Ibom State, Nigeria
- 2. Post Graduate Student, Department of Accounting, Faculty of Business Administration, University of Uyo, Uyo, Akwa Ibom State, Nigeria
Description
There is a long-standing argument that asset types and asset growth contribute to the profitability of a company. However, the conclusions of some studies have shown otherwise. Hence, the need for the study. The aim of this study was to examine the influence of asset growth on profitability of the quoted manufacturing companies in Nigeria. The research design adopted in the study was ex-post facto owing to the fact that the study required secondary data. The population of the study was thirty-three (33) manufacturing companies whose shares were quoted on the floor of Nigerian Exchange Group (NXG) as at 31st December 2019. Twenty-four (24) entities were selected as sample size of the study based on availability of published annual reports. Historical data for the study were collected from the sampled companies for the period of 2013 to 2019. The nature of data was panel data. The dependent variable was Profitability (PRT) while the independent variable was Asset Growth (AG) sub-divided into Non-Current Asset Growth (NCAG), Current Asset Growth (CAG), Net Asset Growth (NAG) and Total Asset Growth (TAG). The descriptive statistics and simple linear regression statistical tools were used to analyse the relevant data collected for the study. All analysis was conducted at 5% level of significance. From the outcomes of the analysis, it was discovered that NCAG, NAG and TAG had positive and significant influence on PRT (P<0.05) of the quoted manufacturing companies in Nigeria and CAG had positive and insignificant influence on PRT (P>0.05) of the listed manufacturing companies in Nigeria. From the findings, it was concluded that asset growth had a positive and significant influence on profitability of the listed manufacturing companies in Nigeria. It was recommended that non-current assets should be acquired and accumulated by the listed manufacturing companies in Nigeria as non-current asset growth had positive and significant influence on profitability of these companies and more investments in current asset should be made to contribute more to profitability as this result revealed liquidity challenges.