INVESTMENT SPIKES AND VALUATION OF THE CONSUMER GOODS FIRMS IN NIGERIA

Abstract

This study investigated the effect of investment spikes on the value of consumer goods firms in Nigeria. Using Keynes’ accelerator theory of investment, the study specifically examined the extent to which the incidence and size of investment spikes drive the improvement in the value of consumer goods firms quoted on the Nigeria exchange group within 11 years spanning 2011 to 2021.  The incidence of investment spike was captured as a dummy of 1 for the occurrence of spike and 0 for non-occurrence of spike. In contrast, the size of the investment spike was the lumpiness of annual investment as a ratio of capital stock. The data were collected from the Annual Report and Statement of Account of quoted consumer goods firms in Nigeria. The panel regression based on the Random Effect Model (REM) was used for the analysis. The results showed that investment spikes have a positive and significant effect on the value of consumer goods firms in Nigeria. The study posits that investment spike is a determinant of firm value in Nigeria such that the prospects for firm value as a strategic performance evaluation indicator are significantly hinged on sound investment spike management. The outcome further provided evidence that heterogeneity and time variants influence the activities of the firms in the consumer goods sector of Nigeria.