Nexus Of Liquidity Management And Corporate Business Failures In Non –Financial Sectors’ A Case Of Nigeria



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Submitted Aug 19, 2019
Published Oct 14, 2019
10.24018/ejbmr.2019.4.5.93

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This paper examined the imperativeness of liquidity management – a key survival strategy of listed companies on the Nigeria Stock Exchange Markets and retrospectively assessed the salient variables on delisted corporate firms in Nigeria. Data were randomly collected from ten companies each from 114 listed and 82 delisted companies on the Nigeria stock exchange market records from January 2016 to 31st December, 2018 - healthy listed companies and 2006 -2008 for delisted records of failed companies. In all, twenty companies were analysed with two-tailed test using a significance level of 0.05 to test the possibility of the relationships, The existence of a positive relationship between liquidity management and profitability of corporate firms in Nigeria were established as the result of the study showed that adequate  liquidity management spurs rapid cash growth, effective operating activities and profit making propensity of corporate healthy businesses which invariably were lacking in the delisted companies and resulted into eventual failure. Also, a higher cash flow from operations reduce the chance of a firm growing resulting into eventual liquidation. Cash flow from investing activities is however seen as a factor that exert a positive influence generally on corporate businesses in Nigeria. The study concluded that ill management of business liquidity is the major cause of failure of corporate businesses in developing economy and as such cash flow from operations, investments and financing activities of a firm should be adequately monitored by the company managers, investors, creditors and suppliers and even the government to forestall financial distress of companies in developing economy.

Keywords: Delisted company, Corporate Business, Healthy companies, Cash-outflow upper limit.

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