What type of study is this?

This is a Observational study (also classified as: Panel Regression).

September 10, 2025Open Access

Firm Characteristics and Profitability in Nigerian Consumer Goods Firms: Assessing the Moderating Effect of Firm Size

Key Points

Liquidity significantly affects profitability, while leverage and firm age have adverse effects.
Analysis reveals that firm size moderates liquidity's impact on profitability through panel regression techniques.
The study utilizes data from 16 consumer goods companies listed on the Nigerian Exchange Group over a decade.
Findings emphasize the need for companies to improve liquidity practices to bolster profitability, especially during growth.

Abstract

This study examines the impact of firm characteristics on the profitability of listed consumer goods companies in Nigeria. The specific objectives are to assess the influence of firm characteristics (liquidity, leverage, and age) on the profitability of these companies in Nigeria, and to explore the moderating effect of firm size on the relationship between firm characteristics and profitability. The ex post facto research design was implemented for this study. The data were collected from secondary sources, particularly the audited financial reports of 16 consumer goods companies listed on the Nigerian Exchange Group as of December 31, 2022, spanning a decade (2013-2022) using purposive sampling techniques. The Descriptive and inferential statistics were employed to analyze the data. The Panel regression analysis was conducted for hypothesis testing, and pre-estimation and post-estimation procedures were executed. The Hausman test confirmed that the random effect model was appropriate. The findings indicate that liquidity has a negative and significant impact on profitability, while leverage and firm age exhibit positive but insignificant effects.The moderating effect of firm size on the relationship between firm characteristics and profitability reveals that liquidity significantly affects profitability. Conversely, leverage and firm age have adverse and insignificant effects. The study concludes that firm size moderates the liquidity effect on profitability. The findings of this study will enhance existing knowledge by emphasizing the significant role of liquidity as a key moderator in the relationship between firm characteristics and profitability. The study recommends that consumer companies strengthen their efforts to enhance liquidity and implement measures to mitigate unexpected cash declines, ensuring adequate liquidity to support a substantial positive increase in profitability, especially during periods of expansion.

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