Babcock Journal of Economics, Banking and Finance: ISSN: 2814-130X

MANAGERIAL EFFICIENCY AND RETURN ON ASSETS OF LISTED SERVICE FIRMS IN NIGERIA

Authors: Owualah Sunday I, Adaise Otobong E,

Pages: (1-20 )

Abstract

The maximization of the interest of stakeholders has become a global and dominant corporate
strategy because profit maximization is important for capital retention. In order to achieve the
objective of profit maximization, managerial efficiency of firms becomes critical because of its
imperativeness towards driving performance. Over the years, managerial inefficiency has
impacted negatively on the financial performance of firms in Nigeria. Organisations with poor
managerial capabilities tend to experience slow growth in sales and profitability which affects
the overall performance of the organization. The study was to examine the relationship
between managerial efficiency and return on assets of listed service firms in Nigeria. The expost-
facto research design was adopted for this study. Population of the study consisted of 24
service firms in Nigeria. The study period was 10 years from 2012-2021. Data were analysed
using correlation matrix and Panel Fully Modified Ordinary Least square (FMOLS) at 0.05 level
of significance. Findings revealed that managerial efficiency has significant influenced on
2 return on assets (ROA) (Adj R = 0.755, F-Stat=32.297, p < 0.005. The study concluded that
managerial efficiency has a significant effect on financial performance of listed service firms in
Nigeria. From the findings, the study recommended that the management of service firms must
ensure that the ratio of operating cost to sales must not be high as operating cost must be
reduced so as to improve sales, thereby increasing their return on assets.

Keywords: Financial performance, Managerial efficiency, Operating cost, Service firms, Working capital,

View Full PDF

Similar Articles