Moderating Effect of Interest Rate on the Relationship between Investment Decision and Financial Performance of Listed Consumer Good Firms’ in Nigeria

The study examines the moderating effect of interest rate on the relationship between investment decision and financial performance of listed consumer goods companies in Nigeria. The data were extracted from the annual reports and accounts of the companies for a period of 14 years (2009-2022). Panel data was used and ex-post factor research design was employed. The inferential statistics were used to analyze the panel data using Stata (version 17). GLS poolability test was conducted to determine both direct and indirect relationship between interacting, endogenous and exogenous variables. Hausman specification test was conducted and the finding from the both models suggested for random effect and was confirmed using lagrangian multiplier test. The result shows that interest rate does not moderate the relationship between investment in tangible asset decision and investment in working capital decision which is statistically not significant on financial performance measure by ROA. However, the study findings reveal that interest rate moderate the relationship between leverage investment decision and financial performance of selected consumer goods companies in Nigeria. It is recommended that companies should pay more attention to leverage investment decision as it affects their performance significantly. Hence, interest rate moderates the relationship between firms’ investments decision on leverage on their financial performance.