Mediating Effect of Firm’s Growth on the Relationship between Leverage and Performance of Consumer Goods Firms in Nigeria

This paper examined the Mediating Effect of Growth on the relationship between Leverage and Performance of Consumer Goods Firms in Nigeria for the period of 2012-2017. The sample consists of a balanced panel data of 17 companies from consumer goods sectors listed on the Nigerian Stock Exchange. The study utilized econometrics regression models to test the mediating effect of growth on the relationship between leverage and performance of consumer goods Firms in Nigeria. The result shows that independent variable (leverage) have significant effect on performance of the sample firms. It was also found that sales growth (mediating variable) have significant effect on performance. Also, the result reveals that leverage have significant effect on sales growth. As, all path c, a, and b are significant, it can be concluded that the sales growth can explain the relationship between leverage and firms’ performance. However, path c′ is not significant which shows the sales growth is fully mediating the relationship. In fact, leverage does not have any significant relationship with Firms’ performance (ROE) in the present of sales growth (full mediation effect). Therefore, it’s recommended that the firms in the sector should be more of equity financed than debt by sourcing more of equity in their finance ratio and avoiding too much debt, since firms’ performance can be strengthened and enhanced by raising the level of sales growth.