Impact Of Financial Constraints On Firms Investment Decision Making In Nigeria

Impact Of Financial Constraints On Firms Investment Decision Making In Nigeria

Preface

The study is concentrated in examining fiscal constraint and investment decision of enterprises in Nigeria. The study seeks to reveal colorful fiscal constraints that are having effect on enterprises ’ investment decision. The data have been taken from the balance distance of nine( 9) manufacturing enterprises listed in the Nigerian Stock Exchange for the time period 2008 to 2012. Multiple retrogression analysis has been done to examine the relationship among establishment’s size, tip payout rate, establishment’s age, capital stock, debt and cash overflows and investment.

The empirical findings show their investments are important affected by oscillations in their cash flows or retained earnings as it has a positive influence on investment and that there’s positive relationship between the enterprises ’ size and investment as well as debt while a negative relationship exists between enterprises ’ age, capital stock, and investment. It also reports that there’s negative relationship between tip payout rate and the investment as well as

The study, therefore, concluded that fiscal constraints are present in the request, which indicates that the enterprises are unfit to pierce to external forms of backing. In addition, the presence also signifies the presence of asymmetric information problem, agency cost, duty prostration coste.t.c. between the establishment and its financer.

It therefore, recommended that an optimal tip decision with lower effect on the enterprises ’ investment decision should be embraced upon by the enterprises. In addition, enterprises should conclude for a strategy of using modest situations of debt and overinvesting as a way of adding debt capacity.