CURRENT ASSET INVESTMENT AND PERFORMANCE MEASURES OF LISTED OIL AND GAS FIRMS IN NIGERIA
Abstract
This study examined the relationship between current asset investment and the performance of listed oil and gas firms in Nigeria. Specifically, the study examined the influence of cash and cash equivalents on return on assets and evaluated the relationship between accounts receivable and return on assets of selected listed oil and gas firms in Nigeria. The study adopted an ex-post facto research design and relied on secondary panel data obtained from the annual reports and financial statements of six purposively selected listed oil and gas firms covering an eleven-year period, resulting in 66 firm-year observations. Data were analysed using panel stationarity tests, panel cointegration tests, Panel Autoregressive Distributed Lag (ARDL) estimation and the ARDL Error Correction Model (ECM). The findings indicated that cash and cash equivalents had a positive and statistically significant effect on return on assets in both the short and long run. In contrast, accounts receivable had a negative and statistically significant effect on return on assets in both the short and long run. The significant and negative error-correction coefficient confirmed the existence of a long-run equilibrium relationship and indicated that deviations from equilibrium were corrected over time. The study concluded that the performance implications of current asset investment differed according to the component of current assets considered. It recommended that listed oil and gas firms maintain adequate liquidity while avoiding excessive idle cash and strengthen receivables management through effective credit assessment, monitoring and timely collection of outstanding debts.
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References
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