Asset Valuation and Financial Performance of Multinational Firms in Nigeria
Adeparubi OLATERU-OLAGBEGI, Muyiwa Ezekiel ALADE (Ph.D) & Wale Henry AGBAJE (Ph.D)
Asset valuation is a critical factor in determining the financial performance of corporate entities, yet the impact of various asset types of multinational firms remains underexplored in emerging markets like Nigeria. This study examines the effect of asset valuation and financial performance among listed multinational firms in Nigeria between 2014 and 2023. Specifically, the study investigates the effect of inventory, equipment, building, and receivable valuation, on financial performance using return on assets (ROA), while the control variable of choice is the firm size. Through a purposive sampling technique, data were drawn from the annual reports of 20 listed multinational firms in the Nigerian Exchange Group. The study employs robust regression techniques to provide a comprehensive understanding of asset management practices. Findings reveal that inventory and receivable valuations have significant positive effects on financial performance, implying that firms with well-managed inventories and receivables tend to exhibit better financial outcomes. However, equipment valuation does not show a significant effect on financial performance, while building valuation is negatively correlated with the firm financial performance, indicating inefficiencies linked to overvalued ‘real estate’ in Nigeria reporting clime. These results emphasize the importance of optimizing the management of inventory and receivables for enhanced liquidity and financial stability. The study recommends that listed firms should prioritize efficient inventory turnover management and receivables collection systems while avoiding overvaluation of physical assets such as buildings. This research offers valuable insights for corporate managers, investors, and analysts in assessing financial health of corporate establishments based on asset valuation strategies.
Keywords: Building valuation, equipment valuation, inventory valuation, multinational firms, receivables valuation, return on asset