THE EFFECT OF FIRM SIZE ON THE FINANCIAL PERFORMANCE OF LISTED INDUSTRIAL GOODS COMPANIES IN NIGERIA

This study examines the effect of firm size on the financial performance of listed industrial goods
companies in Nigeria between 2015 and 2024. The research was motivated by the persistent debate
on whether firm-specific characteristics particularly firm size enhance or constrain corporate
profitability within emerging economies. Using a panel data approach, the study employed both
fixed and random effects regression models to analyze secondary data extracted from the audited
financial statements of 15 industrial goods companies listed on the Nigerian Exchange Group
(NGX). Firm size was measured using the natural logarithm of total assets, while financial
performance was proxied by Return on Assets (ROA), Return on Equity (ROE), and Earnings Per
Share (EPS). Control variables such as leverage, liquidity, and firm age were included to ensure
model robustness.
The empirical results revealed that firm size (β = 0.482, p < 0.01) exerts a positive and statistically
significant effect on financial performance, suggesting that larger industrial firms in Nigeria enjoy
superior profitability due to economies of scale, enhanced access to credit, and better operational
efficiency. The model’s R² value of 0.687 indicates that approximately 69% of variations in firm
performance are explained by firm size and other control variables. In contrast, leverage exhibited
a negative and significant coefficient (β = –0.215, p < 0.05), implying that excessive debt reduces
profitability through increased interest and financing costs.
The findings align with the Trade-Off Theory and the Resource-Based View (RBV), both of which
emphasize the role of internal capabilities and optimal financing structures in sustaining
competitive advantage. Within the Nigerian context, the results highlight that firm size is not
merely a quantitative measure of assets but a strategic resource that enhances operational resilience
and market competitiveness. The study concludes that firm size significantly influences financial
performance in Nigeria’s industrial goods sector, underscoring the need for managerial policies
that promote asset growth, prudent leverage management, and financial efficiency.

Funding: This is self-funded research.

Conflict of Interest: The authors declare no conflicts of interest.

Ethics Approval: Not_applicable

Data Availability: Data will be made available upon reasonable request.

AI-Assisted Writing: No AI tools were used in the preparation of this manuscript.