Effect of Portfolio Management on the Financial Performance of Food and Beverage Companies in Nigeria

Abstract

Portfolio management is fundamental to the growth and financial dependability of any corporate organization in Nigeria. This study assesses the effect of portfolio management, proxy by market shares, and assets allocation on financial performance also proxy by return on assets of food and Beverage Company in Nigeria. Both the export-factor correlation research design was adopted with reliance on secondary data from Nigerian Food and Marketing Board of quoted companies. The purposive sampling technique was employed in selecting the 10 firms out of 15 food and beverage company in Nigeria from 2010-2021 financial year. To achieve the objective of the study, panel regression analysis, Unit roots test, co-integration test and Error Correction Mechanism using the instrumentality of E-views 10. were utilized. Having estimated the parameters of the model numerically, with the use of multiple linear regression on the application of the ordinary least squares (OLS), the finding reveals that market share and asset allocation have a positive relationship with the return on investment, this implies that an increase in the units of market share and asset allocation will lead to a corresponding increase in the return on investment in the period analyzed. However, the error correction mechanism result also shows that the speed of short run adjustment to long run equilibrium is very low. The study therefore, concludes that market share and asset allocation has a positive relationship and a significant impact on the return on investment over the periods covered. More so, we conclude that portfolio management has significant effect on the financial performance of food and beverages company in Nigeria. The study recommends that an intensive policies should be put in place to reconcile the hiatus and increase the level of portfolio management as it have many spillover benefits like increased income, employment creation, improved general well-being of Nigerians as well as reduced pressure from debt/loan and serve as panacea for development needed in food and beverage company in Nigeria and that asset allocation and market share should not be neglected; joint effort should be made by both the private bodies and government in promoting these variables. This is because the result of the research has shown that portfolio management has significant impact on the financial performance of food and beverage companies in Nigeria.