EVALUATING THE IMPACT OF RISK MANAGEMENT ON PERFORMANCE OF MANUFACTURING FIRMS IN NIGERIA

EVALUATING THE IMPACT OF RISK MANAGEMENT ON PERFORMANCE OF MANUFACTURING FIRMS IN NIGERIA

ABSTRACT

This study focused on investigating the impact of risk management on performance of firms in manufacturing sector in Nigeria within the period of 2007 to 2015. This study was carried out to investigate the impact of working capital management and investment capital management on firm’s performance in the manufacturing sector in Nigeria and to also ascertain which of working capital or investment capital is managed more, using working capital and investment capital as proxies for risk management while using return on asset and return on equity as proxies for performance.

Secondary data were collected from the publicly available audited financial statement of the companies selected. Ordinary least Squares Regression was adopted in testing the relationship between risk management and performance of the seven companies respectively while descriptive analysis was done with the use of graph in analyzing changes in the variables over time.

The result from the ordinary least squares (OLS) regression analysis showed that four of the seven companies have significant relationship between investment capital and return on asset while three have significant relationship between working capital and return on asset, and on the other hand there was significant relationship between investment capital management and return on equity of three companies while the other four have no significant relationship between working capital and return on equity.

The study therefore concluded that risk management have impact on performance of firms in the manufacturing sector and also that firms in the manufacturing sector tend to manage their investment capital more than their working capital.

Keywords: Risk, Risk management, Working capital, Investment capital and Performance.