Ownership structure and financial performance of nigerian food and beverage industry

Thesis Abstract

Ownership structure is one of corporate governance mechanism that influences firms’ performance. Owners of the firm had invested purposely for returns, but management as agents pursue interest contrary to that of owners. Therefore owners’ wants control due to firms’ sub optimal performance. This work examined the relationship between ownership structure (managerial, institutional, family, foreign and government) and financial performance (Return on Assets and Return on Equity) in Food and Beverage industry in Nigeria.

The study adopted ex post-facto research design using sixteen (16) listed food and beverage firms in Nigeria. Using secondary data from audited financial reports of the firms between 2010 and 2015, the study used Pearson Moment Correlation co-efficient and regression analysis to analyse the data collected. Statistical Package for Social Sciences (SPSS) version 20.0 was used as analytical tool.

Findings revealed that managerial ownership has insignificant impact on performance (t = 0.293, p =0.774>.05), (t = 1.343, p =0.202 >.05); institutional ownership has significant impact on performance (t = -2.773, p =0.015 <.05), (t = -2.990, p = 0.010 <.05); foreign ownership has significant influence on performance (t = 2.265, p = .041<.05), (t = 1.681, p = 0.047 <.05); government ownership has insignificant impact performance (t = 1.274, p = 0.223>.05), (t = 1.518, p = 0.153 >.05) and family ownership has insignificant impact on performance (t = 0.221, p = 0.828 >.05), (t = 0.497, p =0.627>.05)

The study concluded that foreign ownership structure has significant and positive impact on financial performance; managerial ownership, government ownership and family ownership are weak predictors of financial performance. However, institutional ownership has significant inverse impact on financial performance. It can therefore be deduced that foreign ownership is an antidote for distressed syndrome facing Nigerian food and beverages industry. The study recommended that policy that will encourage foreign direct investment in Nigeria should be aggressively pursued by government and that Nigerian investors should give serious consideration to issues bordering on corporate governance than just considering it as mere legal niceties.

Keywords Managerial ownership, foreign ownership, Return on Asset, Return on Equity, Corporate governance