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Capital Expenditure Decisions And Long Term Value Of The Firm: Evidence From Nigerian Manufacturing Companies

Author

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  • Etim Uwah, Uwem

    (Akwa Ibom State University)

Abstract

This study determined the extent to which capital expenditure decisions made by listed manufacturing companies in Nigeria relate with the value of the firms in the long term. The ex post facto and correlational research designs were adopted for the study. Secondary data were extracted from the Nigerian Stock Exchange Fact Books for the period, 2010 – 2016. The number of manufacturing companies listed in the Stock Exchange during this period was 83, and the sample size used was 69. With the aid of regression analyses, the findings revealed that capital expenditure decisions had a significant relationship with long term value of manufacturing firms. The study concluded that capital expenditure decisions have a significant relationship with the long term value of manufacturing firms in Nigeria. It was recommended that management of manufacturing companies should ensure the holistic use of all techniques, exploring risks, real and growth options analyses as well as portfolio management techniques involving capital assets, in appraising capital investments before taking decisions.

Suggested Citation

  • Etim Uwah, Uwem, 2019. "Capital Expenditure Decisions And Long Term Value Of The Firm: Evidence From Nigerian Manufacturing Companies," International Journal of Contemporary Accounting Issues-IJCAI (formerly International Journal of Accounting & Finance IJAF), The Institute of Chartered Accountants of Nigeria (ICAN), vol. 8(1), pages 152-169, June.
    • Handle: RePEc:ris:ijafic:0020
    as

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    References listed on IDEAS

    as
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    3. Dittmar, Amy & Mahrt-Smith, Jan & Servaes, Henri, 2003. "International Corporate Governance and Corporate Cash Holdings," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 38(1), pages 111-133, March.
    4. Mihir A Desai & Dhammika Dharmapala, 2009. "Corporate Tax Avoidance and Firm Value," The Review of Economics and Statistics, MIT Press, vol. 91(3), pages 537-546, August.
    5. Graham, John R. & Harvey, Campbell R., 2001. "The theory and practice of corporate finance: evidence from the field," Journal of Financial Economics, Elsevier, vol. 60(2-3), pages 187-243, May.
    6. McConnell, John J. & Muscarella, Chris J., 1985. "Corporate capital expenditure decisions and the market value of the firm," Journal of Financial Economics, Elsevier, vol. 14(3), pages 399-422, September.
    7. Beatty, Randolph & Riffe, Susan & Welch, Ivo, 1997. "How Firms Make Capital Expenditure Decisions: Financial Signals, Internal Cash Flows, Income Taxes and the Tax Reform Act of 1986," Review of Quantitative Finance and Accounting, Springer, vol. 9(3), pages 227-250, October.
    Full references (including those not matched with items on IDEAS)

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