Portfolio Management Effect and Financial Performance

An Empirical Analysis of Listed Industrial Goods Firms in Nigeria

Abstract

The study examined portfolio management and its effect on the financial performance of listed industrial goods firm in Nigeria. The study is aimed at establishing the extent of concern and involvement of listed industrial goods firm in Nigeria in the management of their portfolios for the purpose of optimizing their financial performance. The modern portfolio theory (MPT) and Shiftability theory was used to underpin the study. It adopted the ex-post facto research design in analyzing the extent of the relationship amongst portfolio management and financial performance. Data were extracted from the annual reports and accounts of the four (4) sampled industrial goods companies from 2019-2023. The panel regression analysis technique was employed to ascertain the impact of different components of portfolio management on profitability. The study discovers that credit risk management, liquidity management and asset management had no clear significant influence on the financial performance of the sampled listed industrial goods firm in Nigeria but that their synergic influence is significant and critical to their overall financial performance.  Consequently, the study suggests that the industrial goods firms should be more concerned in the development and redefinition of their investment management strategies to be in harmony with their financial objectives; and industry specific risk and asset management strategies should be considered for adoption.  A contextual gap exist as the research was conducted in a different geographical setting.