Asset Pricing, Financial Leverage And Market Valuation Of Quoted Consumer Goods Manufacturing Firms In Nigeria
Dr. Henry Waleru Akani
Department of Finance, Rivers State University, Nkpolu - Port Harcourt, Rivers State, Nigeria
EDE, Queen Chinda
Postgraduate Student, Department of Finance, Rivers State University, Nkpolu - Port Harcourt, Rivers State, Nigeria
Keywords: Asset Pricing, Financial Leverage, Market Valuation, Consumer Goods Manufacturing, Firms, Nigeria
Abstract
This study was undertaken to examine the effects of assets pricing models, financial leverage and market valuation of quoted consumer goods manufacturing firms in Nigeria. Secondary data were obtained from financial statement of 20 quoted consumer goods manufacturing firms from 2014 – 2023. Market value and earnings rate were modeled as the function of Capital assets pricing model, arbitrage pricing model, Fama and French three factor model, efficient market hypotheses, total debt ratio measures as total asset to total debt, Short Term Debt Ratio measures as total assets to total short term debt, long term debt ratio measures as total assets to total short term debt and time interest earned ratio measures as interest charge to earnings before interest and tax.Panel data methods were employed while the fixed and random effects models were used as estimation technique at 5% level of significance. Fixed effects, random effects and pooled estimates were tested while the Hausman test was used to determine the best fit. the study found that 71.3 percent, implying that the independent variables such as assets pricing model, arbitrage pricing model, efficient market hypotheses and Fama and French models account for 71.3 percent variation in the market value of the quoted firms. The Durbin-Watson reveals that there is no serial correlation in the variables. The beta coefficient of constant is negative with the value of -0.236704 and its p-value is 0.0495 indicating that when all the independent variables are held constant, there was negative variation up to the tune of 0.2 units in market valuation of the quoted firm’s valuation and it is significant. 94 percent implying that the independent variables such as capital assets pricing model, arbitrage pricing model, efficient market hypotheses and Fama and French models account for 71.3 percent variation in the net book value of the quoted firms. 94 percent implying that the independent variables such as long term debt, short term debt, total debt and interest earnings ratio account for 1.6 percent market variation in the earnings ratio of the quoted firms in Nigeria. 31.2 percent variation in the earnings rate of the quoted firms over the periods of the study. From the findings, the study concludes significant effect of assets pricing models, financial leverage and market valuation of the quoted consumer goods manufacturing firms. It recommends management to come up with strategies to discourage eliminate factors such as firm size that affect proper evaluation of assets pricing model and financial leverage.