Research Article

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

Ahmad Adamu Ibrahim1*, Abubakar Hamisu Umar2, Yusuf Abubakar Saddiq3
1 School of Preliminary Studies, Sule Lamido University, Kafin Hausa
2 Department of Business Administration and Entrepreneurship (SORTED) Rano
3 Department of Business Administration Hassan Usman Katsina Polytechnic Katsina
* Corresponding author: aadangile@gmail.com
Published: Apr, 2022
DOI: 10.67894/bbr.2022.apq5n9ge
Pages: 66-77
Views: 13
Downloads: 5

Abstract

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. 

Keywords

Growth Firms‘ Performance Leverage Consumer Goods Nigeria

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How to Cite

Ibrahim, A. A., Umar, A. H., & Saddiq, Y. A. (2022). Mediating Effect of Firm’s Growth on the Relationship between Leverage and Performance of Consumer Goods Firms in Nigeria. Bayero Business Review, 6(1), 66-77. https://doi.org/10.67894/bbr.2022.apq5n9ge

A. A. Ibrahim, A. H. Umar, and Y. A. Saddiq, "Mediating Effect of Firm’s Growth on the Relationship between Leverage and Performance of Consumer Goods Firms in Nigeria," Bayero Business Review, vol. 6, no. 1, pp. 66-77, April 2022. doi: 10.67894/bbr.2022.apq5n9ge

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