Risk Management and Financial Performance of Listed Consumer Goods Companies in Nigeria

Abstract

The beginning of the twenty-first century had placed a lot of threats to the accounting profession and hampered the confidence of financial statement users; worldwide. Against this background, this study investigated the effect of risk management on the financial performance of listed consumer goods firms on the Nigerian Stock Exchange for the period 2014 to 2018. Samples of thirteen (13) companies were selected using census techniques. The study used an ex-post facto research design; hence panel data was collected from the annual reports and accounts of the sampled companies. The Ordinary Least Square (OLS) regression model was used in testing the hypotheses stated. Findings showed that liquidity risk and operational risk were statistically insignificant and negatively related to financial performance at a 5% level of significance. However, the market risk was found to be significantly and positively related to financial performance at a 5% level of significance. Therefore, the study concluded that risk management especially market risk affects financial performance. However, the study recommended that management of the companies should promote sound pricing policy of their products and also cut down or reduce operating costs to optimize the high sale and lower operating costs which in return manifest to high revenue generation and boost up the company’s financial performances.