Investment Policy and Net Book Value of Quoted Manufacturing
Firms: Dynamic Panel Data Evidence From Nigeria
Adibe Francis Chikwendu
Department of Banking and Finance, Rivers State University, Nigeriahttps://doi.org/10.47191/jefms/v4-i8-09
This study examined the relationship between investment policy and dynamic of net book value of quoted manufacturing firms in Nigeria. Panel data of 15 quoted manufacturing firms was collected from the annual reports of the manufacturing firms from 2010-2019. Stock prices of the quoted firms was modeled as the function of short term portfolio investment, subsidiary investment, long term portfolio investment and long term investment. Multiple regressions were formulated. Panel data methodology was employed while the fixed effects model was used as estimation technique at 5% level of significance. Fixed effects, random effects and pooled estimates were tested while the Hausman test was used to determine the best fit. Panel unit roots and panel cointegration analysis were conducted on the study. The study found that the independent variables explained 69.1 percent of the systematic variation in net book value of the quoted manufacturing firms. Long term investment and subsidiary investment have positive relationship with net book value of the quoted manufacturing firms while short term and long-term portfolio investment have negative relationship with net book value of the quoted manufacturing firms while the probability coefficient of the variables informed us that the independent variables are statistically not significant. From the findings, the study conclude that investment policy affect significantly the net book value of the quoted manufacturing firms. It recommends that proper investment analysis should be carried out in appraising short term investment to enhance value of manufacturing firms. There is need for management to integrate the objectives of long term investment with the value objective of Nigeria manufacturing firms.
Investment Policy, Net Book Value, Quoted Manufacturing Firms, Dynamic Panel Data, Nigeria.
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