LIQUIDITY RISK AND PERFORMANCE OF NON-FINANCIAL FIRMS LISTED ON THE NIGERIAN STOCK EXCHANGE

Authors

  • Muhammed Alhaji Abubakar Universiti Malaysia Kelantan
  • Nurnaddia Binti Nordin Universiti Malaysia Kelantan
  • Abubakar Hamisu Umar Al-Qalam University Katsina, Nigeria

DOI:

https://doi.org/10.57233/gujaf.v4i1.200

Keywords:

Liquidity Risk, Liquidity, Performance, Non-Financial Firms

Abstract

This study has examined the effect of liquidity risk on performance of non-financial firms listed on the Nigerian Stock Exchange. The main objective was to assess the degree of influence liquidity risk measured by (standard deviation of quick ratio and current ratio) have on performance (return on assets) of the non-financial firms in Nigeria. Data from all the 87 non-financial firms listed on NSE were extracted through financial reports and analyzed using descriptive statistics, correlation and regression through STATA version 16. The findings revealed that current ratio have negative and significant effect on performance, while the quick ratio was not significant in influencing performance. The result implies that an increase in liquidity risk (difficulty in running the operations and offsetting short term maturing obligations), leads to a significant decrease in performance of the firms. The result also confirms that the standard deviation of current ratio provides better measurement of liquidity risk. It was however concluded that, liquidity risk has negative and significant effect on performance of firms in Nigeria. The study recommends that more attention should be given to liquidity management to minimize the risk of insolvency or bankruptcy of firms in Nigeria as such will help in reducing liquidity risk issues and improve performance of the non[1]financial firms in Nigeria.

Author Biographies

Muhammed Alhaji Abubakar, Universiti Malaysia Kelantan

Faculty of Entrepreneurship and Business,
Universiti Malaysia Kelantan

Nurnaddia Binti Nordin, Universiti Malaysia Kelantan

Faculty of Entrepreneurship and Business
Universiti Malaysia Kelantan

Abubakar Hamisu Umar, Al-Qalam University Katsina, Nigeria

Department of Business Administration,
Al-Qalam University Katsina, Nigeria.

Downloads

Published

2023-08-11

How to Cite

Abubakar, M. A. ., Nordin, N. B., & Umar, A. H. . (2023). LIQUIDITY RISK AND PERFORMANCE OF NON-FINANCIAL FIRMS LISTED ON THE NIGERIAN STOCK EXCHANGE. Gusau Journal of Accounting and Finance, 4(1), 54-74. https://doi.org/10.57233/gujaf.v4i1.200