This article investigates the effects of degree of operating leverage and contribution margin on profitability and risk of Nigeria's emerging companies. Emerging companies were described in this study as small and medium-sized enterprises that are high-potential and high-growth in character listed in the Nigerian Stock Exchange's Alternative Investment Market. Cross-sectional and time series data were collected from Nigerian Stock Exchange for the top ten emerging companies listed in the market. Additional restricted-access data about internal management accounting decisions were retrieved directly from these firms. Data were sought to estimate values for operating profit, operating risk, degree of operating leverage, and contribution margin. Since data were collected for ten years in each case, a ten-by-ten panel study involving two models was designed. The probability of both f-test and t-test was 0.05. First, the study shows that degree of operating leverage (DOL) contributes less to profit before interest and tax (PBIT) of emerging companies than contribution margin (CM), yet DOL contributes more to their operating risk profile than CM does. Second, only CM was found to have caused significantly positive changes in operating risk. It was, therefore, concluded that emerging companies face challenges in recovering fixed costs or take unusually longer period to breakeven.

This paper investigates supply-side fraud elasticities of financial intermediation. Three rationales that make intermediation inevitable in modern economics were identified as dependent variables: reduction of transaction cost, transformation of risk, and transformation of liquidity. They were represented by operating cost, valueat-risk, and liquidity ratio, respectively. The independent variables stated in monetary value are unauthorized loans, theft & robbery, and fraudulent withdrawal. These variables were preferred after detailed literature review in the area. Three OLS-type multiple regression models were formulated to estimate the values of the dependent variables and the coefficients of the independent variables. Stationarity test, co-integration test, and Granger causality test were conducted for purposes of ensuring reliability of the time series data collected from NDIC, CBN and NBS in respect of the variables listed above. F-test and t-test were conducted to ascertain the statistical significance of the results. The coefficients of the independent variables were then used to evaluate the dependent variables on account of their responsiveness to changes in bank fraud. It was found that financial intermediation is inelastic to bank fraud. It was concluded that as a result of the minute elasticity, financial intermediation cannot be threatened by fraud but incidence of fraud is a signal for intermediaries and regulators to be alive to the responsibilities.

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This study examined the implications of private cost of capital on the incremental business value (IBV) of middle market firms in Nigeria. Specifically, three costs were identified as follows: private cost of debt (PCD), private cost of equity (PCE), and overall private cost of capital (PCOC). The purpose was to investigate the extent to which private cost of capital, which is calculated differently from weighted average cost of capital for large enterprises, could contribute to incremental business value of middle market (mid-market) firms. Two panel data regression models were specified with one dependent variable (incremental business value). The first model has private cost of equity and private cost of debt as independent variables, while the second has private cost of capital as the independent variable. The panel comprised 10 middle market enterprises registered as members of the Nigerian Association of Stock Dealers (NASD). Middle market enterprises are operators in the private sector whose total assets (excluding land and building) are above one hundred and fifty thousand USD but not more than one million five hundred thousand USD. The study adopted the fixed effect model as the best linear estimator after a model validation with the aid of the Hausman test. We found that private cost of debt, private cost of equity, and overall private cost of capital have negative and significant effects on the incremental business value of middle market firms. We concluded that incremental business value is more elastic to changes in private cost of equity than private cost of debt, and that this is as a result of two phenomena: firstly, higher explicit private cost of equity than debt, and secondly, greater proportion of private equity than private debt in the capital structure of middle market firms in Nigeria.

This paper examines the effect of post-bank consolidation on financial leverage, asset efficiency and profitability of Nigerian banks. Cross-sectional and time series data were collected from Nigerian Stock Exchange fact books and annual reports and accounts of various banks, specifically on revenue, fixed assets, long term debt, and profit after tax. Leverage, assets efficiency and profitability ratios were calculated and the data delineated into two eras: pre-consolidation era (involving 30 banks) and post-consolidation era (with 16 banks). Paired sample t-test of mean and multiple regression analysis were employed to evaluate bank performance. Financial leverage was lower in the post-consolidation era indicating lower risk, lesser vulnerability and greater stability. Assets efficiency and profitability were not significantly different in both eras. Again the multiple regression analysis shows stronger explanatory power of asset efficiency to cause changes in financial leverage for both pre-and post-consolidation eras than that of profitability, albeit in contrast to a priori expectation. The anxieties expressed by industry watchers that the dusts are not yet settled with Nigeria's banks credibility are therefore founded in empirical results.