Financial Strategies and Firm Value Among Listed Non-Financial Firms in Nigeria

Abstract

Abstract Research aim: The nexus between financial strategies and firm value is evident as firms pursue value maximisation through their strategic policies and decisions. However, achieving value maximisation is fraught with challenges relating to tax planning matters, dividend policy, and investment decisions, among others. Hence, this study examines how financial strategies impact firm value of listed non-financial firms in Nigeria. Design/ Methodology/ Approach: This study adopts a longitudinal research design with stratified sampling. A total of 84 firms were sampled out of 104 listed non-financial firms. Data was extracted from these companies’ annual reports and market data websites, and panel generalised least squares (GLS) was employed to analyse the data obtained after the preliminary analysis. Research finding: The results of the analysis reveal that tax planning, investment decisions, dividend policy, and profitability positively impact the value of the Nigerian listed nonfinancial firms. Hence, the study concludes that financial strategies are critical levers for the value maximisation of these firms. Theoretical contribution/Originality: This paper contributes to the literature by using shareholder value maximisation theory to show how a well-designed financial strategy can enhance shareholder value through market confidence, optimised resource allocation, risk management, dividend payment, and effective tax planning. Practitioner/Policy implication: The practical implications of this study are that tax efficiency, effective operational cost management, and strategic investment decisions need to align with the firm-specific risk profile to maximise firm value. To policymakers, easy access to long-term financing and provision of tax breaks and other tax incentives should be encouraged to enable firms to optimise their financial strategies and ultimately firm value. Research limitation: This paper encompasses non-financial firms in Nigeria spanning ten sectors. Future studies can conduct sectoral analysis and take industry-specific factors into consideration.