The Burden of Financial Constraints on Value Creation in Nigerian Consumer Goods Firms

Abstract

This study examined the burden of financial constraints on value creation in Nigerian consumer goods firms. The study adopted an ex-post facto research design and focused on a population of twenty listed consumer goods firms on the Nigerian Exchange Group, from which fifteen firms were selected using purposive sampling based on data availability for the period 2015 to 2024. Secondary data were collected from audited annual reports of the selected firms. Hypotheses were tested using Panel Estimated Generalised Least Squares with Period Seemingly Unrelated Regression after diagnostic tests including heteroskedasticity and cross sectional dependence tests. The findings revealed that increase in financial constraints significantly reduce value creation in Nigerian consumer goods firms (β = -0.003008, p-value = 0.0001). In essence, limited access to finance reduces firms’ ability to generate value and so we recommended that the management of consumer goods firms in Nigeria should strengthen internal financial planning by improving cash flow management and retaining a higher proportion of earnings to support productive investments that enhance value creation.