Analysis Of Risks And Its Effect On Firms Performance In Nigeria Pdf

analysis of risks and its effect on firms performance in nigeria pdf

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Citation: Marshal Iwedi, Oriakpono E. Anderson, Patience S.

Risk Management and Financial Performance of Banks in Nigeria

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Download Free PDF. Olumakinwa Opeoluwa. Olayinka Erin. Olaoye Ogundele. Download PDF. A short summary of this paper. The study investigates 40 companies for the period to resulting into observations.

Our main findings reveal that the regression model is significant at 1 percent level with the adjusted R-Squared of 0. The result of regression coefficient shows that ROA 0. The empirical findings show that ERM is positively and significantly related to firm performance. We recommend that the regulatory authorities in charge of financial sector should ensure that all firms in the sector adopt ERM implementation has a matter of urgency and continue to ensure strict compliance to the ERM framework.

These economic events have shown in repeated global financial crisis that has created the importance for risk management practices Coskun, Risk management is the process by which an organization identifies and analyses threats, examines alternatives, and accepts or mitigates those threats Stanton, Enterprise Risk Management ERM helps organization to understand a wide array of risk facing firms today.

Therefore, risk management is linked to performance. Performance leads to sustainable profitability and growth. Recently, ERM has become a standard practice across the world because of the failure of traditional risk based approach has failed to produce the desired result and that the financial calamity continues to occur on a regular basis.

The financial crisis that engulfed the whole financial world in had a spilled over to Nigerian financial system.

This was aimed to strengthen the financial system and add value to performance in the financial institutions in Nigeria. The CBN issued a corporate governance code for financial institutions and a revised version in The CBN further issued a guideline on risk management framework for all financial institutions in Nigeria. However, there few studies Owojori, et al. None of these studies have examined the impact of ERM on firm performance in the Nigerian financial sector. Prior studies only examined ERM implementation and its challenges in the Nigerian banking industry; therefore, this study tends to increase its scope to the entire financial sector in Nigeria.

ERM is a set of activities that business undertakes to deal with all diverse risks that face it in a holistic and integrated method Ezeosa, Most times these risks have significant impact on the effectiveness, profitability, reputation and performance of business organization. Enterprise risk is the aggregate of all the process and functional risks a business organization faces in the ordinary course of carrying out its business activities. Financial Risk 2. Operational Risk 3. Hazard Risk 4.

Strategic Risk ERM approach is a first attempt to recognise the interrelationship among risks and the treatment of these risks across all business operation. Standard and Poor assert that ERM practice take place when financial institution commit to risk management for all its risks that pose financial threat and commit huge amount of time to mitigate those perceived risk and threat.

Acharyya opine that the primary objective of measuring performance is to assess the progress of achieving corporate strategies which can either be financial and non-financial. Performance is driven by past events of an organization which has impact on the current and future sustainability Manab et al. Gordon et al. They argued that this relationship depends on five variables that influence the impact that ERM has on firm performance.

These five variables are: leverage, profitability, firm size, institutional ownership and international diversification. In financial management, it is believed that most firms use debt to finance its operations. The source to finance its operations can be through options, future or other financial instruments.

Firms actually increase its leverage because of the need to grab opportunity to invest in other business projects without increasing its equity. As a result, firms create an opportunity to add value for its stakeholders if it is able to generate more profit and increase its performance.

Sharma stated that an unlevered firm uses only equity capital while levered firm uses the mix of equity and debts; and firms need to manage the optimal capital structure. Ross, Westerfield, Jaffe and Jordan opine that profitability cab be derived from three most accepted financial ratios namely profit margin, return on equity and return on assets.

These ratios show how companies are able to generate revenue from the investment on assets. Tongli et al. For example, if a firm could increase its size from 1 million to 2 million in the following year, it means that the firm performance is good because the increment of 1 million. This indicates that firm can create value for its shareholders.

Thomsen and Pedersen opine that there are two dimensions to the issue of ownership. Firstly, is the identity and concentration ownership. Secondly, is the legal status that regulates ownership. Their findings show that institutional ownership could influence any decision of management of any organization. Markowitz claimed that diversification is part of Modern Portfolio Theory. Also, Lam viewed diversification as a concept of reducing total risk of a firm by spreading risk among distinct investment, thereby; the total risk produced by a collection of diverse risk is less than the sum of those risks considered in isolation.

The essence of diversification is to reduce risk and also create return for organization. Theoretical Framework The theory that underpins this study is agency theory. This theory underscores the need for firm to reach its goal of improving performance and invariably increasing value for shareholders by implementing Enterprise Risk Management ERM practices. It combines both time series and cross sectional because the study used Panel data.

According to Argyrous panel data are dataset where multiple cases individuals, companies, countries, etc. There are two kinds of information in cross-sectional time-series data: the cross-sectional information reflected in the differences between subjects e. Due to the nature of the research, descriptive as well as correlational design and ex-post factor design were used. There are total 67 companies in the Nigeria financial sector that were listed on the Nigerian Stock Exchange NSE Factsheet, ; however, only 40 companies have effectively adopted ERM for the period under study.

Independent Variables The independent variables are leverage, profitability, size, institutional ownership and international diversification. The independent variables and their proxies are explained as follows: Leverage: In this study, leverage is measured as total liability divided by market value of equity. Size: Size is measured by total assets and other investment. Institutional Ownership: It is measured as majority ownership 30 percent of largest shareholders.

International Diversification: This is transnational diversification. Dummy variable 1 for companies involved in international diversification or otherwise zero 0. Model Specification To examine the association between ERM and firm performance, a fixed effect panel regression model was used to perform an analysis regarding various parameters included in our model. Table 1 present the descriptive statistics which show that there are observations 5 years annual computation of 40 sampled companies.

It contains the value of mean and standard deviations for all the parameters. The standard deviation of ROA 0. Error t-statistic Sig. F-Statistics : 0. Table III present the result of regression analysis. In order not to violate the assumptions underlining the application of regression analysis, multicollinearity diagnostic statistics variance inflation factors VIF and tolerance were computed.

The results show that VIF ranges from 1. The results of the hypothesis are discussed below. The regression table show that ERM is found positive and significant with firm performance.

This finding is consistent with this study of Hoyt and Liebenberg , Thus, the null hypothesis H01 is rejected. The regression coefficient for LEV is negative and not significant at 1 percent.

This study shows that high levered firm does not necessarily means high performance. Thus, the null hypothesis H02 is accepted. This means there is a direct relationship between profitability and firm performance. Thus, the null hypothesis H03 is rejected. The regression coefficient for SIZE is positive and significant at 1 percent level. This supports the general proposition that firm size do have positive impact on firm performance.

Thus, the null hypothesis H04 is rejected. It shows there is a direct relationship between majority ownership and firm performance. It means that pressure from institutional owners in Nigerian financial sector could be considered as an influential factor to increase firm performance. This result is consistent with previous studies Steiner, ; Chen et al.

Thus, the null hypothesis H05 is rejected. The main benefit of diversification is to reduce unsystematic risk since all investment involves some degree of risk. The finding is consistent with the study of Steiner

Risk Management and Financial Performance of Banks in Nigeria

To browse Academia. Skip to main content. By using our site, you agree to our collection of information through the use of cookies. To learn more, view our Privacy Policy. Log In Sign Up. Download Free PDF.

This study investigates the effects of financial policy and firm specific characteristics on corporate performance. Panel data covering a period from to for 70 firms were analyzed. Pooled OLS, Fixed Effect Model and Generalized Method of Moment panel model were employed in the estimation and data were sourced from the annual report and financial statement of the sampled firms. Furthermore, the positive relationship between stock market development and ROA suggest that as stock market develops, various investment opportunities are opened to firms. Therefore, there is need to monitor the performance of these variables in order to stabilize and enhance performance of listed firms in Nigeria. In addition, the result indicates that higher income variability increases the risk that a firm may not be able to cover its interest payment, leading to higher expected costs of financial distress. This may leads to reduce their profitability.


practices and bank financial performance in Nigeria. functioned subprime mortgage lending to firms and people with bad and unreliable credit. This study seeks to examine the effect of risks management on the financial performance of , viewed


Enterprise Risk Management and Firm Performance: Evidence from Financial Sector in Nigeria

The purpose of this study is to examine the effect of capital structure and business risk on corporate performance. The population in this study is a company engaged in the construction and real estate sector that listed on the Indonesia Stock Exchange. The samples taken were 32 companies with purposive sampling. Data is processed using ordinary least square OLS. The results showed on the significance level 0.

See below for the abstract, table of contents, list of figures, list of tables, list of appendices, list of abbreviations and chapter one. This study focused on investigating the impact of risk management on performance of firms in manufacturing sector in Nigeria within the period of to

Enterprise Risk Management and Firm Performance: Evidence from Financial Sector in Nigeria

This paper aims to examine the impact of corporate governance disclosure on firm performance, board composition, and company size. The study used secondary data from companies listed on the Nigerian stock exchange and examined 31 companies across 5 sectors from This study used panel regression techniques and the results indicate that asset turnover, board composition and number of employees are all significantly related to corporate governance disclosure. However, return on assets, return on equity and earnings per share are not significant. Overall, this study found that listed companies comply with the Securities Exchange Commission SEC Disclosure requirements has a positive influence on corporate governance performance for the firms listed in the Nigerian Stock Exchange. Adegbite, E. Corporate governance and responsibility in Nigeria.

Kakanda, Mahmud Mohammed Board attributes, risk management, and firm performance : an analysis of listed financial service firms in Nigeria. The purpose of this study is to examine the relationship between board attributes and risk management committee structure, practice, and disclosure and firm performance return on asset [ROA], return on equity [ROE], and market-to-book ratio [MTB] of listed financial service firms in Nigeria from the year to Data were collected from the annual accounts and reports of 45 sampled firms firm-year observations. However, board composition, board expertise, risk management committee size, and risk management practice and disclosure have a significant negative impact on all the three performance variables in this study. Risk management committee composition shows an insignificant positive association with firm performance. Consequently, the result of this study portrays the influence of Corporate Governance CG mechanisms board attributes and risk management in the Nigerian financial institutions.

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This study seeks to investigate the impact of capital structure on firm performance in Nigeria from to We considered the impact of some key macroeconomic variables gross domestic product and inflation on firm performance. A static panel analysis was used to achieve the objectives of the study. Using fixed effect regression estimation model, a relationship was established between performance proxied by return on investment and leverage of the firms over a period of ten years. A significant negative relationship is established between leverage and performance.

 В этом и заключается его замысел. Алгоритм есть уже у. Танкадо предлагает ключ, с помощью которого его можно расшифровать. - Понятно.  - Она застонала. Все четко, ясно и .

Что-то другое.

Джабба терпеливо ждал, наконец не выдержал и крикнул ассистентке: - Соши. Немедленно. Соши побежала к своему терминалу. Джабба нередко прибегал к ВР, что в компьютерных кругах означало виртуальная реальность, но в АНБ это сокращение имело несколько иной смысл - визуальная репрезентация.

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