Moderating Role of Ownership Concentration on the Effect of Payable and Receivable Days on Firm Performance in Listed Industrial and Consumer Goods Companies in Nigeria

Abstract

Adequate resources and effective management of the resources is a panacea for business survival. Survival hinges on profitability which in turn is used as a basis for measuring the performance of an organization in relation to what is obtainable in the industry. There have been differing opinions on how the management of accounts payable and accounts receivable can influence business performance. However, beaming searchlight on the moderating role of owners may give a better insight into how business can perform favourably or otherwise in the marketplace and this area of research often has been ignored in past studies. To this end, this study scrutinizes the role of ownership concentration in moderating the activities of managers to ensure effective management of accounts payable and accounts receivable with resultant effect on the performance of listed industrial and consumer goods companies in Nigeria. Data for this study was sourced from the database of the Nigerian Stock Exchange for 26 Listed Industrial and Consumer Goods companies in Nigeria which covers a 10-year period from 2011 to 2020. The study employed the ex-post facto research design. The relationship between the data was analysed using the multiple regression model. The study finds that payable and receivable in days moderated by ownership concentration has a positive and significant effect on financial performance. The study makes several recommendations, including that the management of listed consumer and industrial goods companies in Nigeria should build long-term relationships with their suppliers to access trade credit more quickly and easily, as increased use of trade credit improves performance, and to further implement a very active credit policy in preventing sub-standard account receivables.