This study investigates the effect of corporate liquidity policy on the market valuation of listed food and beverage firms in Nigeria over the period 2015–2024. Utilizing panel data from thirteen quoted firms obtained from the Nigerian Exchange Group (NGX) and firms’ audited annual reports, the study adopts Tobin’s Q as a proxy for market valuation, while corporate liquidity policy is measured using the current ratio (CUR), quick ratio (QUR), and cash ratio (CSR). The analysis employs descriptive statistics, panel unit root tests, and a random effects regression model, following Hausman test results, to determine the impact of liquidity policy on firm value. Descriptive results indicate that firms maintain moderate liquidity levels, with average current and quick ratios reflecting sufficient short-term solvency. Panel unit root tests confirm stationarity of the variables, validating the appropriateness of the regression analysis. Empirical findings reveal that both CUR and QUR have positive and statistically significant effects on Tobin’s Q, demonstrating that efficient liquidity management enhances market valuation by reducing financial distress risk, signaling financial strength, and improving operational efficiency. Conversely, CSR exhibits a negative and statistically insignificant relationship with market valuation, suggesting that excessive cash holdings do not contribute meaningfully to firm value and may imply inefficient asset utilization. These results corroborate the Trade-Off, Pecking Order, Agency, and Signaling theories, highlighting that optimal liquidity management, rather than idle cash accumulation, is critical for enhancing investor confidence and firm valuation. The study recommends that managers adopt optimal liquidity targets, integrate liquidity management into corporate financial strategy, and improve disclosure of liquidity policies to strengthen market perception and sustainable firm performance.