Asset Valuation and Firm Capitalization of Consumer Goods Manufacturing Companies Quoted in Nigeria

Abstract

Capitalization enables firms from around the world to be able to evaluate how effective the investments of any company are thus making it an important variable to be considered when making an investment decision. To ascertain a firm's market value or capitalization, assets need to be valued among other measures that need to be undertaken. Thus necessitating this research work on Asset Valuation and Firm Capitalization of Consumer Goods Manufacturing Companies Quoted in Nigeria. For this study, the adopted research design was Ex-post facto. The study’s main objective was to investigate asset valuation's effect on Consumer Goods Manufacturing Companies’ capitalization. The study’s population is 52 manufacturing companies as quoted on the Nigeria Stock Exchange as of 31st December 2020 out of which 12 were purposively selected. Audited annual reports of the companies that were sampled formed the source of Data collected for this study for a period of 10 years (2011 – 2020). Data for this study were analyzed with the aid of descriptive and inferential statistics and the outcome showed that asset valuation significantly affects firm capitalization. This is seen in the Adj.R2 = 0.312126 and F-Statistics = 26.41023 and P-value of 0.000000 values. The conclusion of this study thus is that asset valuation has a significant effect on firm capitalization Consumer Goods Manufacturing Companies Quoted in Nigeria. The study recommended that firm Managers should give due attention to asset management and valuation to ensure a positive and significant impact on firm capitalization while investors are advised to ensure that the assets of a firm are properly valued to ensure fair firm capitalization before embarking on investment commitment.

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“…Fraud is the intentional misrepresentation of a material fact to encourage a party to act to its own detriment, fraud is as old as the human race itself. Fraud according to Adeyemo (2012) is any illegal act characterized by deceit, concealment or violation of trust. Osisioma (2013) defined fraud as all the multifarious means which human ingenuity can devise and are resorted to by one individual to get any advantage over another.…”

“…The banking sector has been singled out for special protection because of the rising cases of financial fraud and the role they also play in the economy. The banking institutions plays a very significant role in the growth of any economy (Adeyemo, 2012). Banks in most economies of the world is key, and the success of monetary policy, to a large extent depends on the soundness of the banking sector through which the policies are implemented (Adeyemo, 2012;Godwin, 2009;Oye, 2003).…”

“…The banking institutions plays a very significant role in the growth of any economy (Adeyemo, 2012). Banks in most economies of the world is key, and the success of monetary policy, to a large extent depends on the soundness of the banking sector through which the policies are implemented (Adeyemo, 2012;Godwin, 2009;Oye, 2003). Financial institution like banks must be protected against fraud.…”