EFFECT OF FIRM CHARACTERISTICS ON THE PROFITABILITY OF MEDIUM-SIZED COMPANIES IN SOUTH EAST NIGERI
Prof. James EdacheIdoko Abbah and Chike Charles Bosah
Volume 8 Issue 1
Abstract
This study examined the effect of firm characteristics proxied by firm size and firm age on the profitability, proxied by Return on Assets (ROA) of twenty-nine (29) medium-sized companies in South East Nigeria. The South East Nigeria which should be the hub of industrial output majorly because of the generally held view that people of that part of Nigeria are very enterprising, is still backward as shown by the several indices of decline of the manufacturing sector to Nigeria’s GDP. Multiple regression was used for this analysis. It was found that firm size has positive and but not significant influence on financial performance (ROA) of firms, that is, the greater the size of a firm, the better the reported ROA. It was also found that firm age negatively affects profitability. It is therefore recommended that the sampled firms should invest only in clearly new profitable businesses because the result showed that as they grow older, the returns reduce. It is also recommended that the medium-sized manufacturing firms in South-East Nigeria should invest more in expanding the size of their operations in order to maintain the right level of profitability since the study have found out that firm size positively influences ROA. Keywords: Firm Size; Firm Age; ROA; Characteristics; South East
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