IMPACT OF FINANCIAL CONSTRAINTS ON FIRMS INVESTMENT DECISION MAKING IN NIGERIA

IMPACT OF FINANCIAL CONSTRAINTS ON FIRMS INVESTMENT DECISION MAKING IN NIGERIA

INTRODUCTION

This study focuses on examining the financial constraints and investment decisions of Nigerian companies. The study seeks to identify various financial constraints that influence a company’s investment decisions. The data comes from the balance sheets of nine of his manufacturing companies listed on the Nigerian Stock Exchange for the period 2008-2012. A multiple regression analysis was performed to examine the relationship between company size, dividend payout ratio, company age, and capital stock. , liabilities and cash flows and investments.

Empirical results show that their investments are strongly influenced by fluctuations in cash flow and internal reserves, which have a positive impact on investment, so while there is a positive relationship between firm size and investment and debt, It is shown that there is a negative relationship. Between firms There is a correlation between age, capital stock and investment. There is also a report that there is a negative relationship between the dividend payout ratio and investment amount

The study therefore concludes that the market is financially constrained, indicating that firms are unable to access external forms of funding. Its existence also means the existence of problems such as information asymmetry between companies and their investors, agency costs, and tax depletion costs.

Therefore, it encourages companies to adopt optimal dividend decisions that have less impact on their investment decisions. Additionally, firms should adopt strategies that utilize moderate leverage and overinvestment as a means of increasing leverage capacity.